Comparing LPL Financial (NASDAQ:LPLA) & Rand Capital (NASDAQ:RAND)

LPL Financial (NASDAQ:LPLA) and Rand Capital (NASDAQ:RAND) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, risk, earnings, analyst recommendations and valuation.

Dividends

LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 12.0%. LPL Financial pays out 9.6% of its earnings in the form of a dividend. Rand Capital pays out -2,900.0% 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. Rand Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares LPL Financial and Rand Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LPL Financial	$16.99 billion	1.51	$863.02 million	$12.54	25.97
Rand Capital	$6.47 million	4.42	-$8.04 million	($0.04)	-240.88

LPL Financial has higher revenue and earnings than Rand Capital. Rand Capital is trading at a lower price-to-earnings ratio than LPL Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares LPL Financial and Rand Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LPL Financial	5.13%	32.20%	9.35%
Rand Capital	-2.67%	5.47%	5.23%

Institutional and Insider Ownership

95.7% of LPL Financial shares are owned by institutional investors. 0.6% of LPL Financial shares are owned by company insiders. Comparatively, 68.2% of Rand Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

LPL Financial has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, Rand Capital has a beta of 0.08, suggesting that its share price is 92% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for LPL Financial and Rand Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LPL Financial	0	3	14	0	2.82
Rand Capital	1	0	0	0	1.00

LPL Financial currently has a consensus price target of $409.69, indicating a potential upside of 25.81%. Given LPL Financial’s stronger consensus rating and higher probable upside, analysts clearly believe LPL Financial is more favorable than Rand Capital.

Summary

LPL Financial beats Rand Capital on 12 of the 16 factors compared between the two stocks.

About LPL Financial

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at enterprises in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, fixed income, alternative investments, retirement and 529 education savings plans, and insurance. The company also provides fee-based platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market products; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.