MarketAxess (NASDAQ:MKTX) and Diamond Hill Investment Group (NASDAQ:DHIL) Financial Review

MarketAxess (NASDAQ:MKTX) and Diamond Hill Investment Group (NASDAQ:DHIL) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Dividends

MarketAxess pays an annual dividend of $3.04 per share and has a dividend yield of 1.8%. Diamond Hill Investment Group pays an annual dividend of $6.00 per share and has a dividend yield of 4.6%. MarketAxess pays out 51.2% of its earnings in the form of a dividend. Diamond Hill Investment Group pays out 34.8% 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. MarketAxess has raised its dividend for 2 consecutive years. Diamond Hill Investment Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

99.0% of MarketAxess shares are held by institutional investors. Comparatively, 65.5% of Diamond Hill Investment Group shares are held by institutional investors. 0.7% of MarketAxess shares are held by company insiders. Comparatively, 4.6% of Diamond Hill Investment Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares MarketAxess and Diamond Hill Investment Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MarketAxess	$837.16 million	7.70	$274.18 million	$5.94	29.04
Diamond Hill Investment Group	$152.08 million	2.33	$43.18 million	$17.22	7.59

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

Volatility and Risk

MarketAxess has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Diamond Hill Investment Group has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Profitability

This table compares MarketAxess and Diamond Hill Investment Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MarketAxess	26.62%	20.41%	15.04%
Diamond Hill Investment Group	31.71%	21.38%	14.72%

Analyst Ratings

This is a breakdown of recent recommendations for MarketAxess and Diamond Hill Investment Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MarketAxess	2	7	5	0	2.21
Diamond Hill Investment Group	0	1	0	0	2.00

MarketAxess currently has a consensus price target of $216.58, indicating a potential upside of 25.58%. Given MarketAxess’ stronger consensus rating and higher possible upside, equities research analysts clearly believe MarketAxess is more favorable than Diamond Hill Investment Group.

Summary

MarketAxess beats Diamond Hill Investment Group on 11 of the 17 factors compared between the two stocks.

About MarketAxess

MarketAxess Holdings Inc., together with its subsidiaries, operates an electronic trading platform for institutional investor and broker-dealer companies worldwide. The company offers trading technology that provides liquidity access in U.S. high-grade bonds, U.S. high-yield bonds, emerging market debt, eurobonds, municipal bonds, U.S. government bonds, and other fixed-income securities; and executes bond trades between and among institutional investor and broker-dealer clients in an all-to-all anonymous trading environment for corporate bonds through its Open Trading protocols. It also provides trading-related products and services, including composite+ pricing and other market data products to assist clients with trading decisions; auto-execution and other execution services for clients requiring specialized workflow solutions; connectivity solutions that facilitate straight-through processing; and technology services to optimize trading environments. In addition, the company offers various pre-and post-trade services, such as trade matching, trade publication, regulatory transaction reporting, and market and reference data across a range of fixed-income and other products. MarketAxess Holdings Inc. was incorporated in 2000 and is headquartered in New York, New York.

About Diamond Hill Investment Group

Diamond Hill Investment Group, Inc., through its subsidiary, Diamond Hill Capital Management, Inc., provides investment advisory and fund administration services in the United States. It offers investment advisory and related services to clients through pooled vehicles, such as private fund; separately managed accounts; collective investment trusts; and other pooled vehicles, including sub-advised funds and model delivery programs. The company also provides fund administration services comprising portfolio and regulatory compliance, treasury and financial oversight, and general business management and governance of the funds, as well as oversight of back-office service providers, which include the custodian, fund accountant, and transfer agent. Diamond Hill Investment Group, Inc. was incorporated in 1990 and is based in Columbus, Ohio.