LPL Financial Holdings (NASDAQ: LPLA) and Goldman Sachs Group, Inc. (The) (NYSE:GS) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitabiliy, risk, valuation, earnings, institutional ownership, analyst recommendations and dividends.
Insider & Institutional Ownership
90.7% of LPL Financial Holdings shares are held by institutional investors. Comparatively, 73.9% of Goldman Sachs Group, Inc. (The) shares are held by institutional investors. 5.7% of LPL Financial Holdings shares are held by company insiders. Comparatively, 2.6% of Goldman Sachs Group, Inc. (The) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares LPL Financial Holdings and Goldman Sachs Group, Inc. (The)’s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| LPL Financial Holdings | $4.13 billion | 1.01 | $560.84 million | $2.30 | 20.05 |
| Goldman Sachs Group, Inc. (The) | $32.25 billion | 2.87 | $7.68 billion | $19.06 | 12.06 |
Goldman Sachs Group, Inc. (The) has higher revenue and earnings than LPL Financial Holdings. Goldman Sachs Group, Inc. (The) is trading at a lower price-to-earnings ratio than LPL Financial Holdings, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares LPL Financial Holdings and Goldman Sachs Group, Inc. (The)’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| LPL Financial Holdings | 5.10% | 26.45% | 4.70% |
| Goldman Sachs Group, Inc. (The) | 26.44% | 11.25% | 0.97% |
Risk & Volatility
LPL Financial Holdings has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500. Comparatively, Goldman Sachs Group, Inc. (The) has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for LPL Financial Holdings and Goldman Sachs Group, Inc. (The), as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| LPL Financial Holdings | 1 | 4 | 3 | 1 | 2.44 |
| Goldman Sachs Group, Inc. (The) | 1 | 13 | 11 | 0 | 2.40 |
LPL Financial Holdings presently has a consensus price target of $42.44, indicating a potential downside of 7.95%. Goldman Sachs Group, Inc. (The) has a consensus price target of $237.50, indicating a potential upside of 3.36%. Given Goldman Sachs Group, Inc. (The)’s higher possible upside, analysts clearly believe Goldman Sachs Group, Inc. (The) is more favorable than LPL Financial Holdings.
Dividends
LPL Financial Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Goldman Sachs Group, Inc. (The) pays an annual dividend of $3.00 per share and has a dividend yield of 1.3%. LPL Financial Holdings pays out 43.5% of its earnings in the form of a dividend. Goldman Sachs Group, Inc. (The) pays out 15.7% 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. LPL Financial Holdings has increased its dividend for 5 consecutive years. LPL Financial Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
LPL Financial Holdings beats Goldman Sachs Group, Inc. (The) on 10 of the 18 factors compared between the two stocks.
LPL Financial Holdings Company Profile
LPL Financial Holdings Inc. is a broker-dealer, a custodian for registered investment advisors and an independent consultant to retirement plans. The Company provides a platform of brokerage and investment advisory services to independent financial advisors, including financial advisors at financial institutions across the country. It also supported approximately 4,000 financial advisors, affiliated and licensed with insurance companies through customized clearing services, advisory platforms and technology solutions, as of December 31, 2016. Through its advisors, it is a distributor of financial products and services in the United States. It provides its technology and service to advisors through a technology platform that is server-based and Web-accessible. Its technology offerings are designed to permit its advisors to manage various aspects of their businesses. It automates time-consuming processes, such as account opening and management, document imaging and account rebalancing.
Goldman Sachs Group, Inc. (The) Company Profile
The Goldman Sachs Group, Inc. is an investment banking, securities and investment management company that provides a range of financial services to corporations, financial institutions, governments and individuals. The Company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment consists of financial advisory and underwriting. The Institutional Client Services segment makes markets and facilitates client transactions in fixed income, equity, currency and commodity products. The investing and lending activities, which are typically longer-term, include its investing and relationship lending activities across various asset classes, primarily debt securities and loans, public and private equity securities, infrastructure and real estate. The Investment Management segment provides investment and wealth advisory services. As of December 2016, it had offices in over 30 countries.
Receive News & Ratings for LPL Financial Holdings Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for LPL Financial Holdings Inc. and related companies with MarketBeat.com's FREE daily email newsletter.
