Critical Analysis: Robinhood Markets (NASDAQ:HOOD) and Diamond Hill Investment Group (NASDAQ:DHIL)

Robinhood Markets (NASDAQ:HOOD) and Diamond Hill Investment Group (NASDAQ:DHIL) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Robinhood Markets and Diamond Hill Investment Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Robinhood Markets	1	8	15	1	2.64
Diamond Hill Investment Group	0	1	0	0	2.00

Robinhood Markets presently has a consensus target price of $136.62, indicating a potential upside of 23.86%. Given Robinhood Markets’ stronger consensus rating and higher probable upside, analysts clearly believe Robinhood Markets is more favorable than Diamond Hill Investment Group.

Profitability

This table compares Robinhood Markets and Diamond Hill Investment Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Robinhood Markets	52.19%	21.74%	5.43%
Diamond Hill Investment Group	31.32%	20.71%	14.34%

Insider & Institutional Ownership

93.3% of Robinhood Markets shares are owned by institutional investors. Comparatively, 65.5% of Diamond Hill Investment Group shares are owned by institutional investors. 14.5% of Robinhood Markets shares are owned by insiders. Comparatively, 4.6% of Diamond Hill Investment Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Robinhood Markets and Diamond Hill Investment Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Robinhood Markets	$2.95 billion	33.61	$1.41 billion	$2.41	45.77
Diamond Hill Investment Group	$151.10 million	3.06	$43.18 million	$17.22	9.90

Robinhood Markets has higher revenue and earnings than Diamond Hill Investment Group. Diamond Hill Investment Group is trading at a lower price-to-earnings ratio than Robinhood Markets, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Robinhood Markets has a beta of 2.44, suggesting that its stock price is 144% more volatile than the S&P 500. Comparatively, Diamond Hill Investment Group has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

Summary

Robinhood Markets beats Diamond Hill Investment Group on 13 of the 15 factors compared between the two stocks.

About Robinhood Markets

Robinhood Markets, Inc. operates financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds (ETFs), American depository receipts, options, gold, and cryptocurrencies. The company offers fractional trading, recurring investments, fully-paid securities lending, access to investing on margin, cash sweep, instant withdrawals, retirement program, around-the-clock trading, and initial public offerings participation services. It also provides various learning and education solutions comprise Snacks, an accessible digest of business news stories for a new generation of investors.; Learn, which is an online collection of beginners' guides, feature tutorials, and financial dictionary; Newsfeeds that offer access to free, premium news from sites from various sites, such as Barron's, Reuters, and Dow Jones. In addition, the company offers In-App Education, a resource that covers investing fundamentals, including why people invest, a stock market overview, and tips on how to define investing goals, as well as allows customers to understand the basics of investing before their first trade; and Crypto Learn and Earn, an educational module available to various crypto customers through Robinhood Learn to teach customers the basics related to cryptocurrency. Further, it provides Robinhood credit cards, cash card and spending accounts, and wallets. Robinhood Markets, Inc. was incorporated in 2013 and is headquartered in Menlo Park, California.

About Diamond Hill Investment Group

Diamond Hill Investment Group, Inc., through its subsidiary, Diamond Hill Capital Management, Inc., provides investment advisory and fund administration services in the United States. It offers investment advisory and related services to clients through pooled vehicles, such as private fund; separately managed accounts; collective investment trusts; and other pooled vehicles, including sub-advised funds and model delivery programs. The company also provides fund administration services comprising portfolio and regulatory compliance, treasury and financial oversight, and general business management and governance of the funds, as well as oversight of back-office service providers, which include the custodian, fund accountant, and transfer agent. Diamond Hill Investment Group, Inc. was incorporated in 1990 and is based in Columbus, Ohio.