Head to Head Analysis: Jefferies Group (JEF) & LPL Financial (LPLA)

Jefferies Group (NYSE: JEF) and LPL Financial (NASDAQ:LPLA) are both investment banking & brokerage services – nec companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Earnings & Valuation

This table compares Jefferies Group and LPL Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Jefferies Group N/A N/A N/A $1.09 N/A
LPL Financial $4.05 billion 1.30 $191.93 million $2.35 24.87

LPL Financial has higher revenue and earnings than Jefferies Group. Jefferies Group is trading at a lower price-to-earnings ratio than LPL Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Jefferies Group and LPL Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Jefferies Group N/A N/A N/A
LPL Financial 5.19% 26.03% 4.72%

Insider and Institutional Ownership

90.3% of LPL Financial shares are held by institutional investors. 4.0% of LPL Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

LPL Financial pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Jefferies Group does not pay a dividend. LPL Financial pays out 42.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current ratings for Jefferies Group and LPL Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Jefferies Group 0 0 0 0 N/A
LPL Financial 0 2 6 1 2.89

LPL Financial has a consensus price target of $58.00, suggesting a potential downside of 0.77%.

Summary

LPL Financial beats Jefferies Group on 10 of the 11 factors compared between the two stocks.

About Jefferies Group

Jefferies Group LLC and its subsidiaries operate as a securities and investment banking firm. The Company operates in two business segments: Capital Markets segment consists of the Company’s securities and commodities trading activities and its investment banking activities, and Asset Management segment includes asset management activities and related services. On July 1, 2011, the Company acquired the Bache Global Commodities Group from Prudential Financial, Inc., and as of November 30, 2011, the Company operated a futures commission merchant through Jefferies Bache, LLC in the United States and a global commodities and financial derivatives broker through Jefferies Bache Limited in the United Kingdom. Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc . Effective March 1, 2013, Leucadia National Corp (Leucadia) acquired the remaining 71.4% interest in Jefferies Group Inc.

About LPL Financial

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.

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