GFI Group (OTCMKTS: GFIG) and KCG Holdings, Inc. Class A (NYSE:KCG) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, profitability, risk, analyst recommendations, dividends and institutional ownership.

Profitability

This table compares GFI Group and KCG Holdings, Inc. Class A’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GFI Group 6.53% 17.81% 3.86%
KCG Holdings, Inc. Class A 16.25% 15.36% 3.35%

Volatility & Risk

GFI Group has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, KCG Holdings, Inc. Class A has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500.

Valuation and Earnings

This table compares GFI Group and KCG Holdings, Inc. Class A’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
GFI Group N/A N/A N/A ($0.15) -41.07
KCG Holdings, Inc. Class A N/A N/A N/A $2.61 7.66

GFI Group is trading at a lower price-to-earnings ratio than KCG Holdings, Inc. Class A, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

82.4% of KCG Holdings, Inc. Class A shares are owned by institutional investors. 9.4% of KCG Holdings, Inc. Class A shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations for GFI Group and KCG Holdings, Inc. Class A, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GFI Group 0 0 0 0 N/A
KCG Holdings, Inc. Class A 0 3 0 0 2.00

KCG Holdings, Inc. Class A has a consensus price target of $20.00, indicating a potential upside of 0.00%. Given KCG Holdings, Inc. Class A’s higher possible upside, analysts plainly believe KCG Holdings, Inc. Class A is more favorable than GFI Group.

Summary

KCG Holdings, Inc. Class A beats GFI Group on 6 of the 8 factors compared between the two stocks.

GFI Group Company Profile

GFI Group Inc. is an intermediary and provider of trading technologies and support services to the global over-the-counter (OTC) and listed markets. The Company provides brokerage and trade execution services, clearing services, market data and trading platform and other software products to institutional customers. It has four segments: Americas Brokerage; Europe, the Middle East and Africa (EMEA) Brokerage; Asia Brokerage, and Clearing and Backed Trading. The Company’s brokerage operations provide brokerage services in four broad product categories: fixed income, financial, equity and commodity. The Company’s Clearing and Backed Trading segment offers clearing, risk management, settlement and other back-office services, as well as provides capital to start-up trading groups, small hedge funds, market-makers and individual traders. The Company is also engaged in cash bond and futures contracts brokerage services, clearing services and analytical and trading software businesses.

KCG Holdings, Inc. Class A Company Profile

KCG Holdings, Inc. is a holding company. The Company is an independent securities company offering investors a range of services designed to address trading needs across asset classes, product types and time zones. The Company combines technology with client service across market making, agency execution and venues. It has multiple access points to trade global equities, fixed income, currencies and commodities via voice or automated execution. The Company serves clients and operates in the markets through three primary businesses, which includes Market Making, Global Execution Services and Venues. In July 2013, the Company announced the completion of the merger whereby Knight Capital Group, Inc. and GETCO Holding Company, LLC had been combined as part of KCG Holdings, Inc.

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