Head to Head Review: LPL Financial (LPLA) vs. Its Rivals

LPL Financial (NASDAQ: LPLA) is one of 23 public companies in the “Security & commodity brokers, dealers, exchanges & services” industry, but how does it contrast to its peers? We will compare LPL Financial to similar companies based on the strength of its dividends, analyst recommendations, institutional ownership, earnings, valuation, profitability and risk.

Earnings & Valuation

This table compares LPL Financial and its peers top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
LPL Financial $5.62 billion $559.88 million 18.38
LPL Financial Competitors $8.04 billion $638.76 million 29.15

LPL Financial’s peers have higher revenue and earnings than LPL Financial. LPL Financial is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Insider & Institutional Ownership

95.7% of LPL Financial shares are owned by institutional investors. Comparatively, 72.6% of shares of all “Security & commodity brokers, dealers, exchanges & services” companies are owned by institutional investors. 2.3% of LPL Financial shares are owned by company insiders. Comparatively, 6.1% of shares of all “Security & commodity brokers, dealers, exchanges & services” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

LPL Financial has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500. Comparatively, LPL Financial’s peers have a beta of 0.46, meaning that their average stock price is 54% less volatile than the S&P 500.

Dividends

LPL Financial pays an annual dividend of $1.00 per share and has a dividend yield of 0.8%. LPL Financial pays out 13.9% of its earnings in the form of a dividend. As a group, “Security & commodity brokers, dealers, exchanges & services” companies pay a dividend yield of 1.5% and pay out 36.0% of their earnings in the form of a dividend. LPL Financial has increased its dividend for 1 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for LPL Financial and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LPL Financial 0 0 8 1 3.11
LPL Financial Competitors 193 1005 1080 29 2.41

LPL Financial presently has a consensus price target of $121.45, indicating a potential downside of 7.95%. As a group, “Security & commodity brokers, dealers, exchanges & services” companies have a potential downside of 0.65%. Given LPL Financial’s peers higher possible upside, analysts clearly believe LPL Financial has less favorable growth aspects than its peers.

Profitability

This table compares LPL Financial and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LPL Financial 8.50% 49.27% 8.93%
LPL Financial Competitors 15.87% 20.53% 7.03%

Summary

LPL Financial beats its peers on 8 of the 15 factors compared.

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 financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and business development companies. The company also provides advisory 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 cash sweep programs; 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 to trusts 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.

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