Analyzing Afya (NASDAQ:AFYA) & IG Group (OTCMKTS:IGGHY)

IG Group (OTCMKTS:IGGHY) and Afya (NASDAQ:AFYA) are both consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Analyst Ratings

This is a summary of recent recommendations for IG Group and Afya, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IG Group	0	0	3	0	3.00
Afya	0	6	1	0	2.14

Afya has a consensus price target of $17.88, indicating a potential upside of 25.88%. Given Afya’s higher probable upside, analysts clearly believe Afya is more favorable than IG Group.

Dividends

IG Group pays an annual dividend of $0.26 per share and has a dividend yield of 1.4%. Afya pays an annual dividend of $0.65 per share and has a dividend yield of 4.6%. IG Group pays out 62.6% of its earnings in the form of a dividend. Afya pays out 42.5% 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. Afya is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares IG Group and Afya”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IG Group	N/A	N/A	N/A	$0.41	44.82
Afya	$3.77 billion	0.35	$134.77 million	$1.53	9.28

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

Profitability

This table compares IG Group and Afya’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IG Group	N/A	N/A	N/A
Afya	20.20%	17.94%	9.16%

Institutional and Insider Ownership

0.1% of IG Group shares are owned by institutional investors. Comparatively, 88.0% of Afya shares are owned by institutional investors. 0.8% of Afya 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.

Summary

Afya beats IG Group on 10 of the 13 factors compared between the two stocks.

About IG Group

IG Group Holdings plc, a fintech company, engages in the online trading business worldwide. The company offers over the counter (OTC) derivatives, which include CFD (Contracts For Difference) that enable traders to take advantage of changes in an asset's price without owning the asset itself, as well as access to a range of risk-mitigation measures, including stops and limits, and negative-balance protection; and OTC FX and options, and spread bets, under IG and IG Prime brands. It also provides exchange-traded derivatives under the tastytrade, an online brokerage and investor education platform; and Spectrum, a multilateral trading facility. In addition, the company offers stock trading and investment services that include share, commodities, equities, and fixed-income assets under IG brand. Further, it provides content and education solutions, such as daily live programming, news and original content, and webinars and tutorials under IG, tastylive, and DailyFX brands. Additionally, the company offers spread betting, CFD trading, foreign exchange and market risk management, data distribution, software development and support, financing, foreign exchange, market making, stock and exchange-traded funds trading, and translation services, as well as issues turbo warrants. IG Group Holdings plc was founded in 1974 and is headquartered in London, the United Kingdom.

About Afya

Afya Limited, through its subsidiaries, operates as a medical education group in Brazil. The company operates through three segments: Undergrad, Continuing Education, and Digital Services. It offers educational products and services, including medical schools, medical residency preparatory courses, graduate courses, and other programs to lifelong medical learners enrolled across its distribution network, as well as to third-party medical schools. The company also provides digital health services, such as subscription-based mobile app and website portal that focuses on assisting health professionals and students with clinical decision-making through tools, such as medical calculators, charts, and updated content, as well as prescriptions, clinical scores, medical procedures and laboratory exams, and others. It offers health sciences courses, which comprise medicine, dentistry, nursing, radiology, psychology, pharmacy, physical education, physiotherapy, nutrition, and biomedicine; and degree programs and courses in other subjects and disciplines, including undergraduate and post graduate courses in business administration, accounting, law, civil engineering, industrial engineering, and pedagogy. In addition, the company provides medical postgraduate specialization programs; printed and digital content; and an online medical education platform and practical medical training services. The company was founded in 1999 and is headquartered in Nova Lima, Brazil.