Critical Review: LPL Financial (NASDAQ:LPLA) & Ridgepost Capital (NYSE:RPC)

Ridgepost Capital (NYSE:RPC) and LPL Financial (NASDAQ:LPLA) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares Ridgepost Capital and LPL Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ridgepost Capital	9.03%	21.02%	9.21%
LPL Financial	5.13%	32.20%	9.35%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ridgepost Capital and LPL Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ridgepost Capital	0	2	2	0	2.50
LPL Financial	0	5	12	0	2.71

Ridgepost Capital currently has a consensus target price of $13.00, indicating a potential upside of 64.39%. LPL Financial has a consensus target price of $405.79, indicating a potential upside of 16.85%. Given Ridgepost Capital’s higher probable upside, analysts clearly believe Ridgepost Capital is more favorable than LPL Financial.

Dividends

Ridgepost Capital pays an annual dividend of $0.16 per share and has a dividend yield of 2.0%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.3%. Ridgepost Capital pays out 64.0% of its earnings in the form of a dividend. LPL Financial pays out 9.6% 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.

Earnings and Valuation

This table compares Ridgepost Capital and LPL Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ridgepost Capital	$297.35 million	2.93	$19.50 million	$0.25	31.63
LPL Financial	$16.99 billion	1.61	$863.02 million	$12.54	27.69

LPL Financial has higher revenue and earnings than Ridgepost Capital. LPL Financial is trading at a lower price-to-earnings ratio than Ridgepost Capital, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

48.0% of Ridgepost Capital shares are owned by institutional investors. Comparatively, 95.7% of LPL Financial shares are owned by institutional investors. 11.8% of Ridgepost Capital shares are owned by insiders. Comparatively, 0.6% of LPL Financial shares are owned 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.

Volatility and Risk

Ridgepost Capital has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500.

Summary

LPL Financial beats Ridgepost Capital on 9 of the 16 factors compared between the two stocks.

About Ridgepost Capital

P10, Inc., together with its subsidiaries, operates as a multi-asset class private market solutions provider in the alternative asset management industry in the United States. The company offers private equity, venture capital, private credit, impact investing, and private credit services, as well as primary fund of funds, secondary investment, and direct and co-investments services. It also provides tax credit transaction and consulting services. The company was founded in 1992 and is headquartered in Dallas, Texas.

About LPL Financial

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at enterprises in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, fixed income, alternative investments, retirement and 529 education savings plans, and insurance. The company also provides fee-based platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market products; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.