Reviewing LPL Financial (NASDAQ:LPLA) & Oppenheimer (NYSE:OPY)

Oppenheimer (NYSE:OPY) and LPL Financial (NASDAQ:LPLA) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Profitability

This table compares Oppenheimer and LPL Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oppenheimer	9.06%	16.55%	4.02%
LPL Financial	5.08%	35.99%	9.63%

Valuation & Earnings

This table compares Oppenheimer and LPL Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oppenheimer	$1.64 billion	0.56	$148.40 million	$13.04	6.65
LPL Financial	$16.99 billion	1.43	$863.02 million	$11.01	27.63

LPL Financial has higher revenue and earnings than Oppenheimer. Oppenheimer is trading at a lower price-to-earnings ratio than LPL Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations for Oppenheimer and LPL Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oppenheimer	0	0	2	0	3.00
LPL Financial	0	5	9	1	2.73

LPL Financial has a consensus price target of $428.71, suggesting a potential upside of 40.94%. Given LPL Financial’s higher probable upside, analysts clearly believe LPL Financial is more favorable than Oppenheimer.

Insider & Institutional Ownership

32.3% of Oppenheimer shares are owned by institutional investors. Comparatively, 95.7% of LPL Financial shares are owned by institutional investors. 34.3% of Oppenheimer shares are owned by company insiders. Comparatively, 0.7% of LPL Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Oppenheimer has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Dividends

Oppenheimer pays an annual dividend of $0.72 per share and has a dividend yield of 0.8%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. Oppenheimer pays out 5.5% of its earnings in the form of a dividend. LPL Financial pays out 10.9% 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. Oppenheimer has increased its dividend for 1 consecutive years. Oppenheimer is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

LPL Financial beats Oppenheimer on 10 of the 18 factors compared between the two stocks.

About Oppenheimer

Oppenheimer Holdings Inc. operates as a middle-market investment bank and full-service broker-dealer in the Americas, Europe, the Middle East, and Asia. The company provides brokerage services covering corporate equity and debt securities, money market instruments, exchange-traded options and futures contracts, municipal bonds, mutual funds, exchange-traded funds, and unit investment trusts; financial and wealth planning services; and margin lending services. It offers asset management services, including separately managed accounts, mutual fund managed accounts, discretionary portfolio management programs, non-discretionary investment advisory and consultation services, alternative investments, portfolio enhancement programs, and institutional taxable fixed income portfolio management strategies and solutions, as well as taxable and non-taxable fixed income portfolios and strategies. In addition, the company offers investment banking services, such as strategic advisory services and capital markets products; merger and acquisition, equities capital market, debt capital market, debt advisory and restructuring, and fund placement services; and institutional equity sales and trading, equity research, equity derivatives and index options, convertible bonds, event driven sales and trading, and portfolio and electronic trading. Further, it provides institutional fixed income sales and trading, fixed income research, public finance, and municipal trading services; and proprietary trading and investment activities. Additionally, the company offers underwriting, market-making, trust, and discount services, as well as a cloud-based financial market. It serves high-net-worth individuals and families, corporate executives, public and private businesses, institutions and corporations, governments, financial sponsors, and domestic and international investors. Oppenheimer Holdings Inc. was founded in 1881 and is headquartered in New York, New York.

About LPL Financial

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at enterprises in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, fixed income, alternative investments, retirement and 529 education savings plans, and insurance. The company also provides fee-based platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market products; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.