Goldman Sachs Group, Inc. (The) (NYSE: GS) and The Charles Schwab Corporation (NYSE:SCHW) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitabiliy, earnings, analyst recommendations and dividends.

Dividends

Goldman Sachs Group, Inc. (The) pays an annual dividend of $3.00 per share and has a dividend yield of 1.3%. The Charles Schwab Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 0.7%. Goldman Sachs Group, Inc. (The) pays out 15.7% of its earnings in the form of a dividend. The Charles Schwab Corporation pays out 21.5% 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. The Charles Schwab Corporation has increased its dividend for 5 consecutive years. Goldman Sachs Group, Inc. (The) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Goldman Sachs Group, Inc. (The) and The Charles Schwab Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Goldman Sachs Group, Inc. (The) $32.25 billion 2.79 $7.37 billion $19.06 12.22
The Charles Schwab Corporation $8.08 billion 7.10 $1.99 billion $1.49 28.78

Goldman Sachs Group, Inc. (The) has higher revenue and earnings than The Charles Schwab Corporation. Goldman Sachs Group, Inc. (The) is trading at a lower price-to-earnings ratio than The Charles Schwab Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for Goldman Sachs Group, Inc. (The) and The Charles Schwab Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs Group, Inc. (The) 1 13 11 0 2.40
The Charles Schwab Corporation 0 6 10 0 2.63

Goldman Sachs Group, Inc. (The) presently has a consensus target price of $237.50, suggesting a potential upside of 1.97%. The Charles Schwab Corporation has a consensus target price of $44.27, suggesting a potential upside of 3.23%. Given The Charles Schwab Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe The Charles Schwab Corporation is more favorable than Goldman Sachs Group, Inc. (The).

Insider & Institutional Ownership

73.7% of Goldman Sachs Group, Inc. (The) shares are held by institutional investors. Comparatively, 79.4% of The Charles Schwab Corporation shares are held by institutional investors. 2.6% of Goldman Sachs Group, Inc. (The) shares are held by company insiders. Comparatively, 12.0% of The Charles Schwab Corporation shares are held 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.

Profitability

This table compares Goldman Sachs Group, Inc. (The) and The Charles Schwab Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs Group, Inc. (The) 26.44% 11.25% 0.97%
The Charles Schwab Corporation 26.73% 15.69% 0.98%

Risk and Volatility

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. Comparatively, The Charles Schwab Corporation has a beta of 1.63, meaning that its stock price is 63% more volatile than the S&P 500.

Summary

The Charles Schwab Corporation beats Goldman Sachs Group, Inc. (The) on 11 of the 17 factors compared between the two stocks.

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.

The Charles Schwab Corporation Company Profile

The Charles Schwab Corporation (CSC) is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, money management and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services and other corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services as well as retirement business services. The Company offers a range of products to address individuals’ varying investment and financial needs. Its product offerings include brokerage, mutual funds, ETFs, advice solutions, banking and trust. Brokerage provides a range of brokerage accounts with cash management capabilities. Mutual funds offer third-party mutual funds through the Mutual Fund Marketplace.

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