Analyzing Cowen Group (COWN) and LPL Financial Holdings (LPLA)
Cowen Group (NASDAQ: COWN) and LPL Financial Holdings (NASDAQ:LPLA) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, analyst recommendations, dividends, earnings and profitabiliy.
Valuation and Earnings
This table compares Cowen Group and LPL Financial Holdings’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Cowen Group||$399.60 million||1.06||-$19.55 million||($0.72)||-21.74|
|LPL Financial Holdings||$4.13 billion||0.99||$560.44 million||$2.30||19.71|
LPL Financial Holdings has higher revenue and earnings than Cowen Group. Cowen Group 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.
LPL Financial Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Cowen Group does not pay a dividend. LPL Financial Holdings pays out 43.5% of its earnings in the form of a dividend.
This table compares Cowen Group and LPL Financial Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|LPL Financial Holdings||5.10%||26.97%||4.71%|
Insider & Institutional Ownership
91.1% of Cowen Group shares are owned by institutional investors. Comparatively, 90.7% of LPL Financial Holdings shares are owned by institutional investors. 4.9% of Cowen Group shares are owned by insiders. Comparatively, 5.7% of LPL Financial Holdings shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
This is a summary of current ratings and recommmendations for Cowen Group and LPL Financial Holdings, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|LPL Financial Holdings||1||4||3||1||2.44|
Cowen Group currently has a consensus price target of $17.00, indicating a potential upside of 8.63%. LPL Financial Holdings has a consensus price target of $42.44, indicating a potential downside of 6.39%. Given Cowen Group’s higher possible upside, research analysts plainly believe Cowen Group is more favorable than LPL Financial Holdings.
Risk and Volatility
Cowen Group has a beta of 1.67, indicating that its share price is 67% more volatile than the S&P 500. Comparatively, LPL Financial Holdings has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500.
LPL Financial Holdings beats Cowen Group on 12 of the 16 factors compared between the two stocks.
Cowen Group Company Profile
Cowen Inc., formerly Cowen Group, Inc., is a financial services company. The Company provides alternative investment management, investment banking, research, sales and trading, and prime brokerage services. It operates through two segments: alternative investment and broker-dealer. The alternative investment segment includes private equity structures, registered investment companies and listed investment vehicles. The broker-dealer segment offers industry focused investment banking for growth-oriented companies, including advisory and global capital markets origination and domain knowledge-driven research, and a sales and trading platform for institutional investors. Its alternative investment platform, which operates under the Ramius name, offers investment products and solutions across the liquidity spectrum to institutional and private clients. Ramius offers investors access to strategies to meet their specific needs, including long/short equity and event driven equity.
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.
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