Reviewing Wells Fargo & Company (NYSE:WFC) & Interactive Brokers Group (NASDAQ:IBKR)

Wells Fargo & Company (NYSE:WFC) and Interactive Brokers Group (NASDAQ:IBKR) are both large-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Earnings & Valuation

This table compares Wells Fargo & Company and Interactive Brokers Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wells Fargo & Company	$125.40 billion	2.14	$19.72 billion	$5.84	14.36
Interactive Brokers Group	$5.19 billion	22.51	$755.00 million	$1.94	35.47

Wells Fargo & Company has higher revenue and earnings than Interactive Brokers Group. Wells Fargo & Company is trading at a lower price-to-earnings ratio than Interactive Brokers Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Wells Fargo & Company pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. Interactive Brokers Group pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. Wells Fargo & Company pays out 30.8% of its earnings in the form of a dividend. Interactive Brokers Group pays out 16.5% 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. Wells Fargo & Company has increased its dividend for 4 consecutive years and Interactive Brokers Group has increased its dividend for 2 consecutive years. Wells Fargo & Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Wells Fargo & Company and Interactive Brokers Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wells Fargo & Company	16.82%	12.29%	1.04%
Interactive Brokers Group	9.78%	4.92%	0.53%

Institutional and Insider Ownership

75.9% of Wells Fargo & Company shares are owned by institutional investors. Comparatively, 23.8% of Interactive Brokers Group shares are owned by institutional investors. 0.1% of Wells Fargo & Company shares are owned by insiders. Comparatively, 3.0% of Interactive Brokers Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Wells Fargo & Company and Interactive Brokers Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wells Fargo & Company	0	8	9	0	2.53
Interactive Brokers Group	0	1	7	0	2.88

Wells Fargo & Company currently has a consensus price target of $83.74, suggesting a potential downside of 0.16%. Interactive Brokers Group has a consensus price target of $59.38, suggesting a potential downside of 13.71%. Given Wells Fargo & Company’s higher possible upside, equities analysts clearly believe Wells Fargo & Company is more favorable than Interactive Brokers Group.

Risk & Volatility

Wells Fargo & Company has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500. Comparatively, Interactive Brokers Group has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Summary

Wells Fargo & Company beats Interactive Brokers Group on 12 of the 17 factors compared between the two stocks.

About Wells Fargo & Company

Wells Fargo & Co. is a diversified and community-based financial services company, which engages in the provision of banking, insurance, investments, mortgage, and consumer and commercial finance products and services. It operates through the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. The Consumer Banking and Lending segment offers consumer and small business banking, home lending, credit cards, auto, and personal lending. The Commercial Banking segment provides banking and credit products across industry sectors and municipalities, secured lending and lease products, and treasury management. The Corporate and Investment Banking segment is composed of corporate banking, investment banking, treasury management, commercial real estate lending and servicing, and equity and fixed income solutions, as well as sales, trading, and research capabilities. The Wealth and Investment Management segment refers to personalized wealth management, brokerage, financial planning, lending, private banking, trust, and fiduciary products and services. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.

About Interactive Brokers Group

Interactive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company engages in the execution, clearance, and settlement of trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange traded funds (ETFs), precious metals, and cryptocurrencies. It also custodies and services accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. In addition, the company offers custody, prime brokerage, securities, and margin lending services. It serves institutional and individual customers through electronic exchanges and market centers. The company was founded in 1977 and is headquartered in Greenwich, Connecticut.