Critical Survey: Interactive Brokers Group (NASDAQ:IBKR) vs. XP (NASDAQ:XP)

XP (NASDAQ:XP) and Interactive Brokers Group (NASDAQ:IBKR) are both large-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, risk, institutional ownership, earnings, profitability, valuation and analyst recommendations.

Dividends

XP pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. Interactive Brokers Group pays an annual dividend of $0.35 per share and has a dividend yield of 0.4%. XP pays out 20.9% of its earnings in the form of a dividend. Interactive Brokers Group pays out 14.0% 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. Interactive Brokers Group has increased its dividend for 2 consecutive years.

Institutional & Insider Ownership

59.2% of XP shares are owned by institutional investors. Comparatively, 23.8% of Interactive Brokers Group shares are owned by institutional investors. 2.8% of Interactive Brokers Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares XP and Interactive Brokers Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
XP	$3.30 billion	3.50	$925.91 million	$1.91	11.26
Interactive Brokers Group	$10.42 billion	14.41	$984.00 million	$2.50	35.32

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

Risk & Volatility

XP has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Interactive Brokers Group has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500.

Profitability

This table compares XP and Interactive Brokers Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
XP	27.20%	22.19%	1.33%
Interactive Brokers Group	9.94%	5.37%	0.52%

Analyst Ratings

This is a breakdown of current ratings and price targets for XP and Interactive Brokers Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
XP	0	2	4	0	2.67
Interactive Brokers Group	0	6	8	1	2.67

XP presently has a consensus price target of $23.50, suggesting a potential upside of 9.30%. Interactive Brokers Group has a consensus price target of $99.00, suggesting a potential upside of 12.12%. Given Interactive Brokers Group’s higher possible upside, analysts clearly believe Interactive Brokers Group is more favorable than XP.

Summary

Interactive Brokers Group beats XP on 12 of the 17 factors compared between the two stocks.

About XP

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.

About Interactive Brokers Group

Interactive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company engages in the execution, clearance, and settlement of trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange traded funds (ETFs), precious metals, and cryptocurrencies. It also custodies and services accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. In addition, the company offers custody, prime brokerage, securities, and margin lending services. It serves institutional and individual customers through electronic exchanges and market centers. The company was founded in 1977 and is headquartered in Greenwich, Connecticut.