Piper Jaffray Companies (NYSE: PJC) and Investment Technology Group (NYSE:ITG) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, institutional ownership, risk, valuation, earnings and dividends.

Volatility & Risk

Piper Jaffray Companies has a beta of 1.44, indicating that its stock price is 44% more volatile than the S&P 500. Comparatively, Investment Technology Group has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500.

Profitability

This table compares Piper Jaffray Companies and Investment Technology Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Piper Jaffray Companies -0.80% 8.84% 3.41%
Investment Technology Group -3.89% 1.73% 0.77%

Institutional & Insider Ownership

70.0% of Piper Jaffray Companies shares are held by institutional investors. Comparatively, 87.4% of Investment Technology Group shares are held by institutional investors. 5.4% of Piper Jaffray Companies shares are held by company insiders. Comparatively, 2.4% of Investment Technology Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Piper Jaffray Companies and Investment Technology Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Piper Jaffray Companies $794.32 million 1.21 -$13.10 million ($0.87) -73.56
Investment Technology Group $460.56 million 1.55 -$18.56 million ($0.56) -38.48

Piper Jaffray Companies has higher revenue and earnings than Investment Technology Group. Piper Jaffray Companies is trading at a lower price-to-earnings ratio than Investment Technology Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Piper Jaffray Companies pays an annual dividend of $1.25 per share and has a dividend yield of 2.0%. Investment Technology Group pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Piper Jaffray Companies pays out -143.7% of its earnings in the form of a dividend. Investment Technology Group pays out -50.0% 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. Piper Jaffray Companies is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings for Piper Jaffray Companies and Investment Technology Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Piper Jaffray Companies 2 2 0 0 1.50
Investment Technology Group 0 1 1 0 2.50

Piper Jaffray Companies currently has a consensus target price of $21.75, suggesting a potential downside of 66.02%. Investment Technology Group has a consensus target price of $18.50, suggesting a potential downside of 14.15%. Given Investment Technology Group’s stronger consensus rating and higher probable upside, analysts plainly believe Investment Technology Group is more favorable than Piper Jaffray Companies.

Summary

Piper Jaffray Companies beats Investment Technology Group on 9 of the 15 factors compared between the two stocks.

About Piper Jaffray Companies

Piper Jaffray Companies is an investment bank and asset management company. The Company’s segments include Capital Markets and Asset Management. The Capital Markets segment provides investment banking and institutional sales, trading and research services for various equity and fixed income products. The Asset Management segment includes its traditional asset management business and its investments in registered funds and private funds or partnerships that it manages. It provides a range of products and services, including equity and debt capital markets products; public finance services; financial advisory services; equity and fixed income institutional brokerage; equity and fixed income research, and asset management services. The Company serves the needs of corporations, private equity groups, public entities, non-profit entities and institutional investors in the United States and internationally.

About Investment Technology Group

Investment Technology Group, Inc. (ITG) is a financial technology company that helps brokers and asset managers improve returns for investors around the world. The Company operates through four segments: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations. These four segments provide categories of products and services, such as Execution Services, Workflow Technology and Analytics. Execution Services includes self-directed trading using algorithms, smart routing and matching through POSIT in cash equities, futures and options trading and portfolio trading and high-touch trading desks providing execution expertise. Workflow Technology includes trade order and execution management software applications in addition to network connectivity. Analytics includes tools enabling portfolio managers and traders to improve pre-trade, real-time and post-trade execution performance; portfolio construction and optimization decisions, and securities valuation.

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