Interactive Brokers Group (NASDAQ: IBKR) and Goldman Sachs (NYSE:GS) are both large-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Risk and Volatility

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Interactive Brokers Group has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, Goldman Sachs has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500.

Insider and Institutional Ownership

15.9% of Interactive Brokers Group shares are owned by institutional investors. Comparatively, 73.2% of Goldman Sachs shares are owned by institutional investors. 2.0% of Interactive Brokers Group shares are owned by company insiders. Comparatively, 1.7% of Goldman Sachs shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Interactive Brokers Group and Goldman Sachs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Interactive Brokers Group 3.94% 1.74% 0.18%
Goldman Sachs 13.36% 11.66% 0.95%

Dividends

Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Goldman Sachs pays an annual dividend of $3.00 per share and has a dividend yield of 1.2%. Interactive Brokers Group pays out 26.1% of its earnings in the form of a dividend. Goldman Sachs pays out 15.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Goldman Sachs has increased its dividend for 6 consecutive years. Goldman Sachs is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings for Interactive Brokers Group and Goldman Sachs, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Interactive Brokers Group 1 2 3 0 2.33
Goldman Sachs 2 11 11 0 2.38

Interactive Brokers Group presently has a consensus target price of $56.75, indicating a potential downside of 21.57%. Goldman Sachs has a consensus target price of $260.15, indicating a potential upside of 0.88%. Given Goldman Sachs’ stronger consensus rating and higher probable upside, analysts clearly believe Goldman Sachs is more favorable than Interactive Brokers Group.

Earnings & Valuation

This table compares Interactive Brokers Group and Goldman Sachs’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Interactive Brokers Group $1.93 billion 15.46 $76.00 million $1.53 47.29
Goldman Sachs $32.07 billion 3.05 $4.29 billion $19.76 13.05

Goldman Sachs has higher revenue and earnings than Interactive Brokers Group. Goldman Sachs is trading at a lower price-to-earnings ratio than Interactive Brokers Group, indicating that it is currently the more affordable of the two stocks.

Summary

Goldman Sachs beats Interactive Brokers Group on 14 of the 17 factors compared between the two stocks.

About Interactive Brokers Group

Interactive Brokers Group, Inc. operates as an automated electronic broker in approximately 120 electronic exchanges and market centers worldwide. It specializes in executing and clearing trades in securities, futures, foreign exchange instruments, bonds, and mutual funds. The company custodies and services accounts for hedge and mutual funds, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. It offers custody, prime brokerage, securities, and margin lending services. The company provides electronic execution and clearing services. Interactive Brokers Group, Inc. was founded in 1977 and is headquartered in Greenwich, Connecticut.

About Goldman Sachs

The Goldman Sachs Group, Inc. operates as an investment banking, securities, and investment management company worldwide. It operates through four segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, spin-offs, and risk management; and underwriting services, such as debt and equity underwriting of public offerings and private placements of various securities and other financial instruments, as well as derivative transactions with public and private sector clients. The Institutional Client Services segment is involved in client execution activities related to making markets in cash and derivative instruments for interest rate products, credit products, mortgages, currencies, commodities, and equities; and provision of securities services comprising financing, securities lending, and other prime brokerage services, as well as markets in and clears client transactions on primary stock, options, and futures exchanges. The Investing & Lending segment invests in and originates longer-term loans to provide financing to clients; and makes investments in debt securities and loans, public and private equity securities, and infrastructure and real estate entities, as well as provides unsecured and secured loans to retail clients through its digital platforms. The Investment Management segment offers investment management products and services; and wealth advisory services consisting of portfolio management, financial planning and counseling, and brokerage and other transaction services. The company serves corporations, financial institutions, governments, and individuals. The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York, New York.

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