JMP Group (NASDAQ: MKTX) and MarketAxess (NASDAQ:MKTX) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, earnings, profitability, institutional ownership and valuation.

Insider and Institutional Ownership

12.5% of JMP Group shares are owned by institutional investors. Comparatively, 100.0% of MarketAxess shares are owned by institutional investors. 52.8% of JMP Group shares are owned by company insiders. Comparatively, 3.5% of MarketAxess shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

JMP Group has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, MarketAxess has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Earnings and Valuation

This table compares JMP Group and MarketAxess’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
JMP Group $109.87 million 1.02 -$15.88 million $0.20 26.10
MarketAxess $397.47 million 17.19 $148.08 million $3.90 46.63

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

Analyst Ratings

This is a summary of recent recommendations for JMP Group and MarketAxess, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
JMP Group 0 1 1 0 2.50
MarketAxess 0 9 0 0 2.00

JMP Group currently has a consensus target price of $6.75, indicating a potential upside of 29.31%. MarketAxess has a consensus target price of $207.00, indicating a potential upside of 13.82%. Given JMP Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe JMP Group is more favorable than MarketAxess.

Profitability

This table compares JMP Group and MarketAxess’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
JMP Group -3.67% 7.03% 0.68%
MarketAxess 37.33% 29.49% 26.60%

Dividends

JMP Group pays an annual dividend of $0.36 per share and has a dividend yield of 6.9%. MarketAxess pays an annual dividend of $1.68 per share and has a dividend yield of 0.9%. JMP Group pays out 180.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MarketAxess pays out 43.1% of its earnings in the form of a dividend. MarketAxess has raised its dividend for 7 consecutive years.

Summary

MarketAxess beats JMP Group on 11 of the 17 factors compared between the two stocks.

About JMP Group

JMP Group LLC, together with its subsidiaries, provides investment banking, sales and trading, equity research, and asset management products and services in the United States. The company operates through three segments: Broker-Dealer, Asset Management, and Corporate. The Broker-Dealer segment offers various services, such as underwriting and acting as a placement agent for public and private capital markets raising transactions; and financial advisory services in mergers and acquisitions, restructuring, and other strategic transactions. This segment also provides institutional brokerage services and equity research services. The Asset Management segment is involved in the management of a range of pooled investment vehicles, including the hedge funds, hedge funds of funds, and collateralized loan obligations. The Corporate segment includes investments in public and private securities, and investment funds, as well as other investing activities. The company also provides investment advisory services to business development companies. In addition, it serves corporates, institutional clients and investors, and high net-worth individuals. JMP Group LLC is headquartered in San Francisco, California.

About MarketAxess

MarketAxess Holdings Inc., together with its subsidiaries, operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. It offers institutional investor and broker-dealer the access to global liquidity in U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, municipal bonds, credit default swaps, and other fixed-income securities. The company, through its Open Trading protocol, executes trades in certain bonds between and among institutional investor and broker-dealer clients in an all-to-all trading environment on a matched principal basis. It also offers trading-related products and services, including market data to assist clients with trading decisions; connectivity solutions that facilitate straight-through processing; technology services to optimize trading environments; and execution services for exchange-traded fund managers and other clients. In addition, the company, through its Trax division, offers a range of pre-and post-trade services, including trade matching, trade publication, regulatory transaction reporting, and market and reference data across a range of fixed-income and other products. MarketAxess Holdings Inc. was founded in 2000 and is headquartered in New York, New York.

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