Reviewing Interactive Brokers Group (IBKR) & Raymond James (RJF)

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Editorial Staff Wcryptn

Date: 21.07.2018

Interactive Brokers Group (NASDAQ: IBKR) and Raymond James (NYSE:RJF) are both large-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Interactive Brokers Group and Raymond James, as provided by MarketBeat.

 


Sell Ratings

Hold Ratings

Buy Ratings

Strong Buy Ratings

Rating Score

Interactive Brokers Group

2

2

3

0

2.14

Raymond James

0

3

6

0

2.67

 

Interactive Brokers Group currently has a consensus price target of $70.00, indicating a potential upside of 14.25%. Raymond James has a consensus price target of $101.33, indicating a potential upside of 9.86%. Given Interactive Brokers Group’s higher possible upside, analysts plainly believe Interactive Brokers Group is more favorable than Raymond James.

Dividends

Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. Raymond James pays an annual dividend of $1.20 per share and has a dividend yield of 1.3%. Interactive Brokers Group pays out 26.1% of its earnings in the form of a dividend. Raymond James pays out 22.9% 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. Raymond James has raised its dividend for 5 consecutive years. Raymond James is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Interactive Brokers Group and Raymond James’ gross revenue, earnings per share (EPS) and valuation.

 


Gross Revenue

Price/Sales Ratio

Net Income

Earnings Per Share

Price/Earnings Ratio

Interactive Brokers Group

$1.93 billion

13.09

$76.00 million

$1.53

40.05

Raymond James

$6.52 billion

2.06

$636.23 million

$5.23

17.64

 

Raymond James has higher revenue and earnings than Interactive Brokers Group. Raymond James 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.

Risk & Volatility

Interactive Brokers Group has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Raymond James has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500.

Insider and Institutional Ownership

15.1% of Interactive Brokers Group shares are owned by institutional investors. Comparatively, 71.1% of Raymond James shares are owned by institutional investors. 2.0% of Interactive Brokers Group shares are owned by insiders. Comparatively, 10.5% of Raymond James shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

 


Net Margins

Return on Equity

Return on Assets

Interactive Brokers Group

4.58%

2.04%

0.22%

Raymond James

10.52%

15.36%

2.52%

 

Summary

Raymond James beats Interactive Brokers Group on 14 of the 17 factors compared between the two stocks.

Interactive Brokers Group Company Profile

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.

Raymond James Company Profile

Raymond James Financial, Inc., a financial holding company, through its subsidiaries, engages in the underwriting, distribution, trading, and brokerage of equity and debt securities, and the sale of mutual funds and other investment products in the United States, Canada, Europe, and internationally. The company operates through Private Client Group, Capital Markets, Asset Management, RJ Bank, and Other segments. The Private Client Group segment provides securities brokerage services, including the sale of equities, mutual funds, fixed income products, and insurance products to their individual clients; and borrowing and lending of securities to and from other broker-dealers, financial institutions, and other counterparties. The Capital Markets segment offers securities brokerage, trading, and research services to institutions with a focus on sale of the United States and Canadian equities and fixed income products; and manages and participates in underwritings, merger and acquisition services, and public finance activities. The Asset Management segment engages in the operations of Eagle, the Eagle Family of Funds, Cougar, the asset management operations of Raymond James & Associates, trust services of Raymond James Trust, and other fee-based asset management programs. The RJ Bank segment provides corporate loans, SBL, tax-exempt loans, and residential loans. The Other segment engages in private equity activities, including various direct and third party private equity investments; and private equity funds. Raymond James Financial, Inc. was founded in 1962 and is based in St. Petersburg, Florida.

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