Analyzing UBS Group (NYSE:UBS) and Intercontinental Exchange (NYSE:ICE)

Intercontinental Exchange (NYSE:ICE) and UBS Group (NYSE:UBS) are both large-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Earnings and Valuation

This table compares Intercontinental Exchange and UBS Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Intercontinental Exchange	$12.64 billion	6.86	$3.31 billion	$7.08	21.80
UBS Group	$76.12 billion	2.10	$7.77 billion	$2.94	17.39

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

Profitability

This table compares Intercontinental Exchange and UBS Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Intercontinental Exchange	30.08%	14.95%	2.77%
UBS Group	13.10%	10.50%	0.57%

Dividends

Intercontinental Exchange pays an annual dividend of $2.08 per share and has a dividend yield of 1.3%. UBS Group pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. Intercontinental Exchange pays out 29.4% of its earnings in the form of a dividend. UBS Group pays out 12.2% 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. Intercontinental Exchange has increased its dividend for 9 consecutive years and UBS Group has increased its dividend for 5 consecutive years. Intercontinental Exchange is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Intercontinental Exchange and UBS Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Intercontinental Exchange	0	2	9	1	2.92
UBS Group	2	5	4	0	2.18

Intercontinental Exchange currently has a consensus target price of $184.17, indicating a potential upside of 19.30%. UBS Group has a consensus target price of $60.30, indicating a potential upside of 17.95%. Given Intercontinental Exchange’s stronger consensus rating and higher probable upside, analysts plainly believe Intercontinental Exchange is more favorable than UBS Group.

Volatility and Risk

Intercontinental Exchange has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, UBS Group has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.

Institutional and Insider Ownership

89.3% of Intercontinental Exchange shares are held by institutional investors. 0.8% of Intercontinental Exchange shares are held by company insiders. Comparatively, 1.0% of UBS Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Intercontinental Exchange beats UBS Group on 13 of the 18 factors compared between the two stocks.

About Intercontinental Exchange

Intercontinental Exchange, Inc., together with its subsidiaries, engages in the provision of market infrastructure, data services, and technology solutions for financial institutions, corporations, and government entities in the United States, the United Kingdom, the European Union, Singapore, India, Abu Dhabi, Israel, and Canada. It operates through three segments: Exchanges, Fixed Income and Data Services, and Mortgage Technology. The company operates regulated marketplaces for listing, trading, and clearing an array of derivatives contracts and financial securities, such as commodities, interest rates, foreign exchange, and equities, as well as corporate and exchange-traded funds; and trading venues, including regulated exchanges and clearing houses. It also offers energy, agricultural and metals, and financial futures and options; and cash equities and equity options, and over-the-counter and other markets, as well as listings and data and connectivity services. In addition, the company provides fixed income data and analytic, fixed income execution, CDS clearing, and other multi-asset class data and network services. Further, it offers proprietary and comprehensive mortgage origination platform, which serves residential mortgage loans; closing solutions that provides customers connectivity to the mortgage supply chain and facilitates the secure exchange of information; data and analytics services; and Data as a Service for lenders to access data and origination information. Intercontinental Exchange, Inc. was founded in 2000 and is headquartered in Atlanta, Georgia.

About UBS Group

UBS Group AG provides financial advice and solutions to private, institutional, and corporate clients worldwide. It operates through five divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, Investment Bank, and Non-core and Legacy. The company offers investment advice, estate and wealth planning, investing, corporate and banking, and investment management, as well as mortgage, securities-based, and structured lending solutions. It also provides personal banking products and services, such as deposits, credit and debit cards, and online and mobile banking, as well as lending, investments, retirement, and wealth management services; and corporate and institutional solutions, including equity and debt capital markets, syndicated and structured credit, private placements, leasing, traditional financing, and transaction banking solutions for payment and cash management services, trade and export finance, and global custody solutions. In addition, the company offers equities, fixed income, hedge funds, real estate and private markets, indexed and alternative beta strategies, asset allocation and currency investment strategies, customized multi-asset solutions, advisory and fiduciary services, and multi-manager hedge fund solutions and advisory services. Further, it advises clients on strategic business opportunities and helps them raise capital to fund their activities; enables its clients to buy, sell, and finance securities on capital markets and to manage their risks and liquidity; distributes, trades in, finances, and clears cash equities and equity-linked products; structures, originates, and distributes new equity and equity-linked issues; and originates, distributes, manages risk, and provides liquidity in foreign exchange, rates, credit and precious metals. The company was formerly known as UBS AG and changed its name to UBS Group AG in December 2014. UBS Group AG was founded in 1862 and is headquartered in Zurich, Switzerland.