Reviewing MarketAxess (NASDAQ:MKTX) & Futu (NASDAQ:FUTU)

MarketAxess (NASDAQ:MKTX) and Futu (NASDAQ:FUTU) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.

Analyst Ratings

This is a summary of current ratings and target prices for MarketAxess and Futu, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MarketAxess	0	12	1	0	2.08
Futu	0	4	2	0	2.33

MarketAxess currently has a consensus price target of $159.44, indicating a potential downside of 3.48%. Futu has a consensus price target of $139.91, indicating a potential upside of 41.97%. Given Futu’s stronger consensus rating and higher probable upside, analysts clearly believe Futu is more favorable than MarketAxess.

Risk and Volatility

MarketAxess has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, Futu has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares MarketAxess and Futu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MarketAxess	33.51%	22.75%	12.35%
Futu	42.95%	28.20%	4.40%

Earnings & Valuation

This table compares MarketAxess and Futu”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MarketAxess	$846.27 million	6.87	$246.63 million	$8.17	20.22
Futu	$2.94 billion	4.71	$1.46 billion	$10.10	9.76

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

Insider & Institutional Ownership

99.0% of MarketAxess shares are held by institutional investors. 0.7% of MarketAxess shares are held by insiders. Comparatively, 35.2% of Futu shares are held by 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.

Dividends

MarketAxess pays an annual dividend of $3.12 per share and has a dividend yield of 1.9%. Futu pays an annual dividend of $2.55 per share and has a dividend yield of 2.6%. MarketAxess pays out 38.2% of its earnings in the form of a dividend. Futu pays out 25.2% 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. MarketAxess has raised its dividend for 2 consecutive years. Futu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Futu beats MarketAxess on 11 of the 17 factors compared between the two stocks.

About MarketAxess

MarketAxess Holdings Inc. operates an electronic trading platform for fixed-income securities. Its marketplace connects institutional investors and broker-dealers, enabling them to trade bonds and other debt instruments through electronic tools such as request-for-quote and open trading protocols. The platform supports trading across a range of fixed-income markets, including U.S. and European corporate bonds, U.S. Treasuries, municipal bonds, emerging-market debt and other securities. MarketAxess also provides market data and trading analytics to help clients assess prices and make trading decisions.

About Futu

Futu Holdings Ltd. is a financial technology company that provides digital brokerage and wealth management services. Its platforms include Futu NiuNiu and moomoo, which offer tools for investors to trade and manage investments. The company’s services include securities trading, market data and research, investment education, and online investor communities. Its brokerage platforms provide access to products such as stocks, exchange-traded funds, options, and other investment products, with availability varying by market.