Charles Schwab (NYSE:SCHW) and SEI Investments (NASDAQ:SEIC) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Profitability

This table compares Charles Schwab and SEI Investments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Charles Schwab 30.83% 17.96% 1.18%
SEI Investments 30.25% 29.98% 24.81%

Dividends

Charles Schwab pays an annual dividend of $0.52 per share and has a dividend yield of 1.1%. SEI Investments pays an annual dividend of $0.60 per share and has a dividend yield of 1.1%. Charles Schwab pays out 31.7% of its earnings in the form of a dividend. SEI Investments pays out 25.9% 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. Charles Schwab has increased its dividend for 2 consecutive years and SEI Investments has increased its dividend for 8 consecutive years.

Insider and Institutional Ownership

80.3% of Charles Schwab shares are owned by institutional investors. Comparatively, 68.9% of SEI Investments shares are owned by institutional investors. 11.5% of Charles Schwab shares are owned by company insiders. Comparatively, 17.3% of SEI Investments shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Charles Schwab and SEI Investments’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Charles Schwab $8.62 billion 7.32 $2.35 billion $1.64 28.48
SEI Investments $1.53 billion 5.63 $404.38 million $2.32 23.61

Charles Schwab has higher revenue and earnings than SEI Investments. SEI Investments is trading at a lower price-to-earnings ratio than Charles Schwab, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Charles Schwab has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500. Comparatively, SEI Investments has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Charles Schwab and SEI Investments, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Charles Schwab 2 5 6 0 2.31
SEI Investments 0 1 3 0 2.75

Charles Schwab presently has a consensus target price of $59.08, suggesting a potential upside of 26.52%. SEI Investments has a consensus target price of $82.00, suggesting a potential upside of 49.72%. Given SEI Investments’ stronger consensus rating and higher probable upside, analysts plainly believe SEI Investments is more favorable than Charles Schwab.

Summary

Charles Schwab beats SEI Investments on 9 of the 17 factors compared between the two stocks.

Charles Schwab Company Profile

The Charles Schwab Corporation, through its subsidiaries, provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company operates through two segments, Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; and retail investor, retirement plan, and mutual fund clearing services. The Advisor Services segment provides custodial, trading, and support services; and retirement business and corporate brokerage retirement services. This segment provides brokerage accounts with cash management capabilities; third-party mutual funds, as well as proprietary mutual funds, plus mutual fund trading, and clearing services to broker-dealers; and exchange-traded funds (ETFs), including proprietary and third-party ETFs. It also offers advice solutions, such as managed portfolios of proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, and specialized planning and portfolio management. In addition, this segment provides banking products and services, including checking and savings accounts, certificates of deposit, first lien residential real estate mortgage loans, home equity loans and lines of credit, and pledged asset lines; and trust services comprising trust custody services, personal trust reporting services, and administrative trustee services. The company serves individuals and institutional clients in the United States, the Commonwealth of Puerto Rico, England, Hong Kong, Singapore, and Australia. The Charles Schwab Corporation was founded in 1971 and is headquartered in San Francisco, California.

SEI Investments Company Profile

SEI Investments Co. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides wealth management, retirement and investment solutions, asset management, asset administration, investment processing outsourcing solutions, financial services, and investment advisory services to its clients. It provides its services to private banks, independent financial advisers, institutional investors, investment managers, investment advisors, wealth management organizations, corporations, retirement scheme sponsors, not-for-profit organizations, hedge fund managers, registered investment advisers, independent broker-dealers, financial planners, life insurance agents, defined-benefit schemes, defined-contribution schemes, endowments, foundations, and board-designated fund, through its subsidiaries. Through its subsidiaries, the firm manages separate client-focused portfolios. It also launches and manages equity, fixed income, and balanced mutual funds, through its subsidiaries. Through its subsidiaries, the firm invests in public equity and fixed income markets. It employs fundamental and quantitative analysis with a focus on top-down and bottom-up analysis to make its investments, through its subsidiaries. SEI Investments Co. was founded in 1968 and is based in Oaks, Pennsylvania.

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