Charles Schwab Co. Common Stock (SCHW) and Investment Technology Group (ITG) Critical Analysis

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Investment Technology Group (NYSE: ITG) and Charles Schwab Co. Common Stock (NYSE:SCHW) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Volatility & Risk

Investment Technology Group has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Charles Schwab Co. Common Stock has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Profitability

This table compares Investment Technology Group and Charles Schwab Co. Common Stock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Investment Technology Group -8.17% 3.88% 1.76%
Charles Schwab Co. Common Stock 28.80% 16.84% 1.11%

Valuation & Earnings

This table compares Investment Technology Group and Charles Schwab Co. Common Stock’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Investment Technology Group $483.69 million 1.49 -$39.44 million $0.30 72.67
Charles Schwab Co. Common Stock $8.62 billion 8.70 $2.35 billion $1.64 33.87

Charles Schwab Co. Common Stock has higher revenue and earnings than Investment Technology Group. Charles Schwab Co. Common Stock is trading at a lower price-to-earnings ratio than Investment Technology Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Investment Technology Group pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Charles Schwab Co. Common Stock pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. Investment Technology Group pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Charles Schwab Co. Common Stock pays out 24.4% of its earnings in the form of a dividend. Charles Schwab Co. Common Stock has raised its dividend for 2 consecutive years.

Insider & Institutional Ownership

85.1% of Investment Technology Group shares are owned by institutional investors. Comparatively, 80.1% of Charles Schwab Co. Common Stock shares are owned by institutional investors. 3.0% of Investment Technology Group shares are owned by insiders. Comparatively, 11.5% of Charles Schwab Co. Common Stock 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 Ratings

This is a breakdown of current ratings and recommmendations for Investment Technology Group and Charles Schwab Co. Common Stock, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Investment Technology Group 0 0 2 0 3.00
Charles Schwab Co. Common Stock 1 8 7 0 2.38

Investment Technology Group presently has a consensus price target of $21.00, suggesting a potential downside of 3.67%. Charles Schwab Co. Common Stock has a consensus price target of $55.53, suggesting a potential downside of 0.01%. Given Charles Schwab Co. Common Stock’s higher possible upside, analysts plainly believe Charles Schwab Co. Common Stock is more favorable than Investment Technology Group.

Summary

Charles Schwab Co. Common Stock beats Investment Technology Group on 12 of the 17 factors compared between the two stocks.

About Investment Technology Group

Investment Technology Group, Inc. operates as a financial technology company in the United States, Canada, Europe, and the Asia Pacific. The company offers various solutions for asset managers and broker-dealers in the areas of execution services, workflow technology, and analytics that provide trade execution services and solutions for portfolio management, as well as pre-trade analytics, and post-trade analytics and processing. The company's products include POSIT, a point-in-time electronic crossing network for equity orders and price improvement opportunities; algorithms and smart order routers that offers portfolio managers and traders a way to trade orders; and single stock and portfolio trading, as well as derivatives execution and technology services focusing on sell-side clients, professional traders, and select hedge funds. It also provides Execution Management System, which offers execution and analytical tools for global list-based and single-stock trading, futures and options, and a financial services communications network; and Order Management System that combines portfolio management and compliance functionality. In addition, the company provides ITG Net, a financial communications network; RFQ-hub, a multi-asset platform for financial instruments; Single Ticket Clearing, a broker-neutral operational service; and Commission Manager, a Web-based commission management portal. Further, it offers Trading Analytics, which enables portfolio managers and traders to enhance execution performance through trading analytics and risk models; and Portfolio Analytics that assists asset managers with portfolio decision-making tasks from portfolio construction and optimization. Additionally, the company provides software development and maintenance services; and workflow technology solutions and network connectivity services for the financial community. Investment Technology Group, Inc. was founded in 1983 and is headquartered in New York, New York.

About Charles Schwab Co. Common Stock

The Charles Schwab Corporation, through its subsidiaries, provides wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The company operates through two segments, Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services, and other corporate brokerage services; equity compensation plan sponsors full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights; and retail investor, retirement plan, and mutual fund clearing services. The Advisor Services segment provides custodial, trading, and support services; and retirement business and corporate brokerage retirement services. This segment provides brokerage accounts with cash management capabilities; third-party mutual funds, as well as proprietary mutual funds, plus mutual fund trading, and clearing services to broker-dealers; and exchange-traded funds (ETFs), including proprietary and third-party ETFs. It also offers advice solutions, such as managed portfolios of proprietary and third-party mutual funds and ETFs, separately managed accounts, customized personal advice for tailored portfolios, and specialized planning and portfolio management. In addition, this segment provides banking products and services, including checking and savings accounts, certificates of deposit, first lien residential real estate mortgage loans, home equity loans and lines of credit, and pledged asset lines; and trust services comprising trust custody services, personal trust reporting services, and administrative trustee services. The company serves individuals and institutional clients in the United States, the Commonwealth of Puerto Rico, England, Hong Kong, Singapore, and Australia. The Charles Schwab Corporation was founded in 1971 and is headquartered in San Francisco, California.

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