Financial Contrast: Intercontinental Exchange (NYSE:ICE) and UBS Group (NYSE:UBS)

UBS Group (NYSE:UBS) and Intercontinental Exchange (NYSE:ICE) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for UBS Group and Intercontinental Exchange, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UBS Group	2	5	4	0	2.18
Intercontinental Exchange	0	2	9	1	2.92

UBS Group presently has a consensus target price of $60.30, indicating a potential upside of 17.95%. Intercontinental Exchange has a consensus target price of $184.17, indicating a potential upside of 19.30%. Given Intercontinental Exchange’s stronger consensus rating and higher possible upside, analysts clearly believe Intercontinental Exchange is more favorable than UBS Group.

Profitability

This table compares UBS Group and Intercontinental Exchange’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UBS Group	13.10%	10.50%	0.57%
Intercontinental Exchange	30.08%	14.95%	2.77%

Dividends

UBS Group pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. Intercontinental Exchange pays an annual dividend of $2.08 per share and has a dividend yield of 1.3%. UBS Group pays out 12.2% of its earnings in the form of a dividend. Intercontinental Exchange pays out 29.4% 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. UBS Group has raised its dividend for 5 consecutive years and Intercontinental Exchange has raised its dividend for 9 consecutive years. Intercontinental Exchange is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares UBS Group and Intercontinental Exchange”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UBS Group	$76.12 billion	2.10	$7.77 billion	$2.94	17.39
Intercontinental Exchange	$12.64 billion	6.86	$3.31 billion	$7.08	21.80

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

Insider & Institutional Ownership

89.3% of Intercontinental Exchange shares are held by institutional investors. 1.0% of UBS Group shares are held by insiders. Comparatively, 0.8% of Intercontinental Exchange shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

UBS Group has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Intercontinental Exchange has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Summary

Intercontinental Exchange beats UBS Group on 13 of the 18 factors compared between the two stocks.

About UBS Group

UBS Group AG provides financial advice and solutions to private, institutional, and corporate clients worldwide. It operates through five divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, Investment Bank, and Non-core and Legacy. The company offers investment advice, estate and wealth planning, investing, corporate and banking, and investment management, as well as mortgage, securities-based, and structured lending solutions. It also provides personal banking products and services, such as deposits, credit and debit cards, and online and mobile banking, as well as lending, investments, retirement, and wealth management services; and corporate and institutional solutions, including equity and debt capital markets, syndicated and structured credit, private placements, leasing, traditional financing, and transaction banking solutions for payment and cash management services, trade and export finance, and global custody solutions. In addition, the company offers equities, fixed income, hedge funds, real estate and private markets, indexed and alternative beta strategies, asset allocation and currency investment strategies, customized multi-asset solutions, advisory and fiduciary services, and multi-manager hedge fund solutions and advisory services. Further, it advises clients on strategic business opportunities and helps them raise capital to fund their activities; enables its clients to buy, sell, and finance securities on capital markets and to manage their risks and liquidity; distributes, trades in, finances, and clears cash equities and equity-linked products; structures, originates, and distributes new equity and equity-linked issues; and originates, distributes, manages risk, and provides liquidity in foreign exchange, rates, credit and precious metals. The company was formerly known as UBS AG and changed its name to UBS Group AG in December 2014. UBS Group AG was founded in 1862 and is headquartered in Zurich, Switzerland.

About Intercontinental Exchange

Intercontinental Exchange, Inc., together with its subsidiaries, engages in the provision of market infrastructure, data services, and technology solutions for financial institutions, corporations, and government entities in the United States, the United Kingdom, the European Union, Singapore, India, Abu Dhabi, Israel, and Canada. It operates through three segments: Exchanges, Fixed Income and Data Services, and Mortgage Technology. The company operates regulated marketplaces for listing, trading, and clearing an array of derivatives contracts and financial securities, such as commodities, interest rates, foreign exchange, and equities, as well as corporate and exchange-traded funds; and trading venues, including regulated exchanges and clearing houses. It also offers energy, agricultural and metals, and financial futures and options; and cash equities and equity options, and over-the-counter and other markets, as well as listings and data and connectivity services. In addition, the company provides fixed income data and analytic, fixed income execution, CDS clearing, and other multi-asset class data and network services. Further, it offers proprietary and comprehensive mortgage origination platform, which serves residential mortgage loans; closing solutions that provides customers connectivity to the mortgage supply chain and facilitates the secure exchange of information; data and analytics services; and Data as a Service for lenders to access data and origination information. Intercontinental Exchange, Inc. was founded in 2000 and is headquartered in Atlanta, Georgia.