Financial Review: TD Ameritrade (AMTD) & MarketAxess (MKTX)

TD Ameritrade (NASDAQ: AMTD) and MarketAxess (NASDAQ:MKTX) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Analyst Recommendations

This is a summary of current ratings and target prices for TD Ameritrade and MarketAxess, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TD Ameritrade 1 4 13 0 2.67
MarketAxess 0 6 0 0 2.00

TD Ameritrade currently has a consensus target price of $64.18, suggesting a potential upside of 6.31%. MarketAxess has a consensus target price of $209.80, suggesting a potential downside of 3.19%. Given TD Ameritrade’s stronger consensus rating and higher probable upside, research analysts plainly believe TD Ameritrade is more favorable than MarketAxess.

Risk & Volatility

TD Ameritrade has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, MarketAxess has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Profitability

This table compares TD Ameritrade and MarketAxess’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TD Ameritrade 22.02% 19.66% 3.72%
MarketAxess 37.61% 29.82% 27.00%

Institutional and Insider Ownership

91.8% of TD Ameritrade shares are held by institutional investors. Comparatively, 99.9% of MarketAxess shares are held by institutional investors. 0.4% of TD Ameritrade shares are held by company insiders. Comparatively, 3.5% of MarketAxess shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

TD Ameritrade pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. MarketAxess pays an annual dividend of $1.68 per share and has a dividend yield of 0.8%. TD Ameritrade pays out 45.7% of its earnings in the form of a dividend. MarketAxess pays out 43.1% 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.

Valuation and Earnings

This table compares TD Ameritrade and MarketAxess’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TD Ameritrade $3.68 billion 9.32 $872.00 million $1.84 32.81
MarketAxess $397.47 million 20.31 $148.08 million $3.90 55.57

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

Summary

MarketAxess beats TD Ameritrade on 9 of the 16 factors compared between the two stocks.

TD Ameritrade Company Profile

TD Ameritrade Holding Corporation provides securities brokerage and related technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. Its products and services include tdameritrade.com, a Web platform for self-directed retail investors; Trade Architect, a Web-based platform for investors and traders to identify opportunities and stay informed; thinkorswim, a desktop platform for traders; and TD Ameritrade Mobile, which allows on-the-go investors and traders to trade and monitor accounts. The company also offers TD Ameritrade Institutional that provides brokerage and custody services to approximately 6,000 independent RIAs and their clients; TD Ameritrade Education, which allows investor education for stocks, options, income investing, and portfolio management; TD Ameritrade's Goal Planning that offers investment consulting and planning services; Selective Portfolios, an advisory service, which develops portfolios of exchange-traded funds (ETFs) and mutual funds; AdvisorDirect, a national referral service for investors; TD Ameritrade Singapore Pte. Ltd. that enables retail investors in Singapore to trade the U.S. markets; and TD Ameritrade Corporate Services, which provide self-directed brokerage services to employees of corporations. In addition, it offers various retail brokerage products and services, such as common and preferred stocks; ETFs; options; futures; foreign exchange; mutual funds; fixed income products; primary and secondary offerings of fixed income securities, closed-end funds, and preferred stocks; margin lending; cash management services; and annuities. The company provides its services primarily through the Internet, a network of retail branches, mobile trading applications, interactive voice response, and registered representatives through telephone. TD Ameritrade Holding Corporation was founded in 1971 and is headquartered in Omaha, Nebraska.

MarketAxess Company Profile

MarketAxess Holdings Inc., together with its subsidiaries, operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. It offers institutional investor and broker-dealer the access to global liquidity in U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, municipal bonds, credit default swaps, and other fixed-income securities. The company, through its Open Trading protocol, executes trades in certain bonds between and among institutional investor and broker-dealer clients in an all-to-all trading environment on a matched principal basis. It also offers trading-related products and services, including market data to assist clients with trading decisions; connectivity solutions that facilitate straight-through processing; technology services to optimize trading environments; and execution services for exchange-traded fund managers and other clients. In addition, the company, through its Trax division, offers a range of pre-and post-trade services, including 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 founded in 2000 and is headquartered in New York, New York.

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