Contrasting Interactive Brokers Group (NASDAQ:IBKR) and Wells Fargo & Company (NYSE:WFC)

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

Risk and Volatility

Interactive Brokers Group has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500. Comparatively, Wells Fargo & Company has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Profitability

This table compares Interactive Brokers Group and Wells Fargo & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Interactive Brokers Group	9.78%	4.92%	0.53%
Wells Fargo & Company	16.82%	12.29%	1.04%

Earnings and Valuation

This table compares Interactive Brokers Group and Wells Fargo & Company”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Interactive Brokers Group	$5.19 billion	22.51	$755.00 million	$1.94	35.47
Wells Fargo & Company	$125.40 billion	2.14	$19.72 billion	$5.84	14.36

Wells Fargo & Company has higher revenue and earnings than Interactive Brokers Group. Wells Fargo & Company 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.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Interactive Brokers Group and Wells Fargo & Company, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Interactive Brokers Group	0	1	7	0	2.88
Wells Fargo & Company	0	8	9	0	2.53

Interactive Brokers Group currently has a consensus target price of $59.38, indicating a potential downside of 13.71%. Wells Fargo & Company has a consensus target price of $83.74, indicating a potential downside of 0.16%. Given Wells Fargo & Company’s higher probable upside, analysts plainly believe Wells Fargo & Company is more favorable than Interactive Brokers Group.

Institutional & Insider Ownership

23.8% of Interactive Brokers Group shares are held by institutional investors. Comparatively, 75.9% of Wells Fargo & Company shares are held by institutional investors. 3.0% of Interactive Brokers Group shares are held by insiders. Comparatively, 0.1% of Wells Fargo & Company shares are held 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.

Dividends

Interactive Brokers Group pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. Wells Fargo & Company pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. Interactive Brokers Group pays out 16.5% of its earnings in the form of a dividend. Wells Fargo & Company pays out 30.8% 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 and Wells Fargo & Company has increased its dividend for 4 consecutive years. Wells Fargo & Company is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Wells Fargo & Company beats Interactive Brokers Group on 12 of the 17 factors compared between the two stocks.

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.

About Wells Fargo & Company

Wells Fargo & Co. is a diversified and community-based financial services company, which engages in the provision of banking, insurance, investments, mortgage, and consumer and commercial finance products and services. It operates through the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. The Consumer Banking and Lending segment offers consumer and small business banking, home lending, credit cards, auto, and personal lending. The Commercial Banking segment provides banking and credit products across industry sectors and municipalities, secured lending and lease products, and treasury management. The Corporate and Investment Banking segment is composed of corporate banking, investment banking, treasury management, commercial real estate lending and servicing, and equity and fixed income solutions, as well as sales, trading, and research capabilities. The Wealth and Investment Management segment refers to personalized wealth management, brokerage, financial planning, lending, private banking, trust, and fiduciary products and services. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.