Interactive Brokers Group (NASDAQ:IBKR) and Houlihan Lokey (NYSE:HLI) Head-To-Head Analysis

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

Volatility and Risk

Interactive Brokers Group has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500.

Profitability

This table compares Interactive Brokers Group and Houlihan Lokey’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Interactive Brokers Group	10.03%	5.38%	0.51%
Houlihan Lokey	15.78%	19.94%	11.51%

Insider and Institutional Ownership

23.8% of Interactive Brokers Group shares are owned by institutional investors. Comparatively, 78.1% of Houlihan Lokey shares are owned by institutional investors. 2.8% of Interactive Brokers Group shares are owned by insiders. Comparatively, 22.5% of Houlihan Lokey shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Interactive Brokers Group pays an annual dividend of $0.35 per share and has a dividend yield of 0.4%. Houlihan Lokey pays an annual dividend of $2.80 per share and has a dividend yield of 2.0%. Interactive Brokers Group pays out 13.5% of its earnings in the form of a dividend. Houlihan Lokey pays out 47.0% 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. Interactive Brokers Group has raised its dividend for 2 consecutive years and Houlihan Lokey has raised its dividend for 9 consecutive years. Houlihan Lokey 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 Houlihan Lokey”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Interactive Brokers Group	$10.42 billion	13.27	$984.00 million	$2.60	31.28
Houlihan Lokey	$2.62 billion	3.80	$425.70 million	$5.96	24.02

Interactive Brokers Group has higher revenue and earnings than Houlihan Lokey. Houlihan Lokey 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.

Analyst Ratings

This is a summary of current ratings and price targets for Interactive Brokers Group and Houlihan Lokey, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Interactive Brokers Group	0	6	11	1	2.72
Houlihan Lokey	0	5	7	0	2.58

Interactive Brokers Group presently has a consensus price target of $102.87, indicating a potential upside of 26.48%. Houlihan Lokey has a consensus price target of $160.44, indicating a potential upside of 12.07%. Given Interactive Brokers Group’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Interactive Brokers Group is more favorable than Houlihan Lokey.

Summary

Interactive Brokers Group beats Houlihan Lokey on 10 of the 18 factors compared between the two stocks.

About Interactive Brokers Group

Interactive Brokers Group, Inc. is an electronic brokerage firm that provides trade execution, clearing and custody services to individual investors and institutional clients, including financial advisers, hedge funds and proprietary trading groups. Its platforms give clients access to a range of investments, including stocks, options, futures, currencies, bonds and funds, with product availability varying by location. The company serves clients in many countries and provides access to markets around the world.

About Houlihan Lokey

Houlihan Lokey, Inc. is a global investment bank headquartered in Los Angeles. Founded in 1972, the firm provides financial advice and related services to corporations, financial sponsors, governments and other organizations. The company’s main businesses include corporate finance, financial restructuring and financial and valuation advisory. Its services include advising on mergers and acquisitions, debt and equity financing, restructuring transactions, and business and asset valuations. Houlihan Lokey serves clients across the Americas, Europe, the Middle East and Asia-Pacific through an international office network.