Contrasting Apollo Global Management (NYSE:APO) and LPL Financial (NASDAQ:LPLA)

LPL Financial (NASDAQ:LPLA) and Apollo Global Management (NYSE:APO) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Institutional & Insider Ownership

95.7% of LPL Financial shares are held by institutional investors. Comparatively, 77.1% of Apollo Global Management shares are held by institutional investors. 0.6% of LPL Financial shares are held by company insiders. Comparatively, 8.3% of Apollo Global Management shares are held by company 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 recent ratings and recommmendations for LPL Financial and Apollo Global Management, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LPL Financial	0	3	14	0	2.82
Apollo Global Management	0	6	14	0	2.70

LPL Financial currently has a consensus target price of $409.69, indicating a potential upside of 27.64%. Apollo Global Management has a consensus target price of $152.60, indicating a potential upside of 37.64%. Given Apollo Global Management’s higher probable upside, analysts clearly believe Apollo Global Management is more favorable than LPL Financial.

Valuation and Earnings

This table compares LPL Financial and Apollo Global Management”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LPL Financial	$16.99 billion	1.49	$863.02 million	$12.54	25.59
Apollo Global Management	$32.05 billion	2.04	$3.49 billion	$2.73	40.61

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

Dividends

LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. Apollo Global Management pays an annual dividend of $2.25 per share and has a dividend yield of 2.0%. LPL Financial pays out 9.6% of its earnings in the form of a dividend. Apollo Global Management pays out 82.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Global Management has increased its dividend for 3 consecutive years. Apollo Global Management is clearly the better dividend stock, given its higher yield and longer track record of dividend 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, Apollo Global Management has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500.

Profitability

This table compares LPL Financial and Apollo Global Management’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%
Apollo Global Management	5.22%	14.01%	1.18%

Summary

Apollo Global Management beats LPL Financial on 10 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 Apollo Global Management

Apollo Global Management, Inc. is a private equity firm specializing in investments in credit, private equity, infrastructure, secondaries and real estate markets. The firm prefers to invest in private and public markets. The firm’s private equity investments include traditional buyouts, recapitalization, distressed buyouts and debt investments in real estate, corporate partner buyouts, distressed asset, corporate carve-outs, middle market, growth, venture capital, turnaround, bridge, corporate restructuring, special situation, acquisition, and industry consolidation transactions. For credit strategies, the firm focuses to invest in multi-sector credit, semi-liquid credit, direct lending, first lien, unitranche, whole loans and private credit. The firm provides its services to endowment and sovereign wealth funds, as well as other institutional and individual investors. It manages client focused portfolios. The firm launches and manages hedge funds for its clients. It also manages real estate funds and private equity funds for its clients. The firm invests in the fixed income and alternative investment markets across the globe. Its fixed income investments include income-oriented senior loans, bonds, collateralized loan obligations, structured credit, opportunistic credit, non-performing loans, distressed debt, mezzanine debt, and value oriented fixed income securities. The firm seeks to invest in chemicals, commodities, consumer and retail, oil and gas, metals, mining, agriculture, commodities, distribution and transportation, financial and business services, manufacturing and industrial, media distribution, cable, entertainment and leisure, telecom, technology, natural resources, energy, packaging and materials, and satellite and wireless industries. It also focuses on clean energy, sustainable industry, climate solutions, energy transition, industrial decarbonization, sustainable mobility, sustainable resource use, and sustainable real estate. It seeks to invest in companies based in across Africa, Asia, North America with a focus on United States, Western Europe and Europe. It employs a combination of contrarian, value, and distressed strategies to make its investments. The firm seeks to make investments in the range of $75 million and $1500 million. The firm seeks to invest in companies with Enterprise value between $750 million to $2500 million. The firm conducts in-house research to create its investment portfolio. It seeks to acquire minority and majority positions in its portfolio companies. Apollo Global Management, Inc. was founded in 1990 and is headquartered in New York, New York with additional offices in North America, Asia, Africa and Europe.