Head to Head Review: LPL Financial Holdings (LPLA) vs. Nomura Holdings Inc ADR (NMR)

LPL Financial Holdings (NASDAQ: LPLA) and Nomura Holdings Inc ADR (NYSE:NMR) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Dividends

LPL Financial Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Nomura Holdings Inc ADR pays an annual dividend of $0.07 per share and has a dividend yield of 1.3%. LPL Financial Holdings pays out 43.5% of its earnings in the form of a dividend. Nomura Holdings Inc ADR pays out 11.1% 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.

Analyst Recommendations

This is a breakdown of current recommendations for LPL Financial Holdings and Nomura Holdings Inc ADR, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LPL Financial Holdings 1 2 4 1 2.63
Nomura Holdings Inc ADR 0 2 1 0 2.33

LPL Financial Holdings presently has a consensus price target of $49.25, suggesting a potential upside of 4.61%. Given LPL Financial Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe LPL Financial Holdings is more favorable than Nomura Holdings Inc ADR.

Volatility & Risk

LPL Financial Holdings has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500. Comparatively, Nomura Holdings Inc ADR has a beta of 1.59, indicating that its share price is 59% more volatile than the S&P 500.

Institutional & Insider Ownership

89.7% of LPL Financial Holdings shares are held by institutional investors. Comparatively, 0.6% of Nomura Holdings Inc ADR shares are held by institutional investors. 4.0% of LPL Financial Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LPL Financial Holdings and Nomura Holdings Inc ADR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LPL Financial Holdings 5.10% 26.45% 4.70%
Nomura Holdings Inc ADR 15.47% 8.69% 0.57%

Valuation and Earnings

This table compares LPL Financial Holdings and Nomura Holdings Inc ADR’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LPL Financial Holdings $4.13 billion 1.03 $560.84 million $2.30 20.47
Nomura Holdings Inc ADR $12.98 billion 1.49 $2.23 billion $0.63 8.67

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

Summary

LPL Financial Holdings beats Nomura Holdings Inc ADR on 12 of the 17 factors compared between the two stocks.

LPL Financial Holdings Company Profile

LPL Financial Holdings Inc. is a broker-dealer, a custodian for registered investment advisors and an independent consultant to retirement plans. The Company provides a platform of brokerage and investment advisory services to independent financial advisors, including financial advisors at financial institutions across the country. It also supported approximately 4,000 financial advisors, affiliated and licensed with insurance companies through customized clearing services, advisory platforms and technology solutions, as of December 31, 2016. Through its advisors, it is a distributor of financial products and services in the United States. It provides its technology and service to advisors through a technology platform that is server-based and Web-accessible. Its technology offerings are designed to permit its advisors to manage various aspects of their businesses. It automates time-consuming processes, such as account opening and management, document imaging and account rebalancing.

Nomura Holdings Inc ADR Company Profile

Nomura Holdings, Inc. (Nomura) is a financial services company. The Company, through its broker-dealer, banking and other financial services subsidiaries, provide investment, financing and related services to individual, institutional and government clients across the world. The Company’s segments include Retail, Asset Management and Wholesale. Its clients include individuals, corporations, financial institutions, governments and governmental agencies. The Company’s Retail segment provides investment consultation services to individual clients in Japan. The Company’s Asset Management segment develops and manages investment trusts, and provides investment advisory services. The Company’s Wholesale segment is engaged in the sales and trading of debt and equity securities, derivatives, and currencies on a global basis, and provides investment banking services, such as the underwriting of debt and equity securities, as well as mergers and acquisitions and financial advice.

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