Financial Contrast: Intercontinental Exchange (NYSE:ICE) and StepStone Group (NASDAQ:STEP)

StepStone Group (NASDAQ:STEP) and Intercontinental Exchange (NYSE:ICE) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, risk, earnings and institutional ownership.

Risk and Volatility

StepStone Group has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500. Comparatively, Intercontinental Exchange has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Insider and Institutional Ownership

55.5% of StepStone Group shares are held by institutional investors. Comparatively, 89.3% of Intercontinental Exchange shares are held by institutional investors. 15.7% of StepStone 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, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares StepStone Group and Intercontinental Exchange”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StepStone Group	$1.99 billion	2.52	-$535.81 million	($7.72)	-5.45
Intercontinental Exchange	$12.64 billion	7.23	$3.31 billion	$7.08	22.98

Intercontinental Exchange has higher revenue and earnings than StepStone Group. StepStone 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.

Analyst Recommendations

This is a breakdown of recent recommendations for StepStone Group and Intercontinental Exchange, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StepStone Group	1	2	8	0	2.64
Intercontinental Exchange	1	3	12	1	2.76

StepStone Group currently has a consensus price target of $67.22, indicating a potential upside of 59.90%. Intercontinental Exchange has a consensus price target of $186.31, indicating a potential upside of 14.49%. Given StepStone Group’s higher possible upside, equities analysts plainly believe StepStone Group is more favorable than Intercontinental Exchange.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
StepStone Group	-30.53%	43.38%	4.40%
Intercontinental Exchange	30.08%	14.95%	2.77%

Dividends

StepStone Group pays an annual dividend of $1.32 per share and has a dividend yield of 3.1%. Intercontinental Exchange pays an annual dividend of $2.08 per share and has a dividend yield of 1.3%. StepStone Group pays out -17.1% 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. StepStone Group has increased its dividend for 3 consecutive years and Intercontinental Exchange has increased its dividend for 9 consecutive years. StepStone Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Intercontinental Exchange beats StepStone Group on 11 of the 18 factors compared between the two stocks.

About StepStone Group

StepStone Group Inc. is a private equity and venture capital firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments. For direct investment, it seeks to invest in private debt, venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, buyout investments in mature and middle market companies. It prefers to invest in natural resources, technology, healthcare, services, materials, manufacturing, consumer durables, apparel, hotels, restaurants and leisure, media, retailing, power, utilities consumer staples, financials, telecommunication services, clean energy/renewables, transport, social, natural capital, infrastructure, corporate, real estate, credit and real asset. The firm invests globally with a focus on United States, North America, Europe, Asia, Latin America, Middle East, Africa, Brazil, Mexico, Argentina, Colombia, New Zealand, China, India, Korea, Japan, Taiwan, and Australia region. The firm invests between 5% and 40% in emerging markets. For fund of fund investment, it seeks to invest in private equity funds, venture capital funds, Special situation funds, Real estate funds, Infrastructure funds, mezzanine funds, and turnaround/distressed funds. It considers investments in both domestic and international funds. It also seeks to make co-investments and follow-on investments and considers partial interests in funds. StepStone Group Inc. was founded in 2007 and is based in New York, New York with additional offices across North America, South America, Europe, Australia and Asia.

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.