Comparing LPL Financial (NASDAQ:LPLA) and JPMorgan Chase & Co. (NYSE:JPM)

JPMorgan Chase & Co. (NYSE:JPM) and LPL Financial (NASDAQ:LPLA) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.

Risk & Volatility

JPMorgan Chase & Co. has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for JPMorgan Chase & Co. and LPL Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
JPMorgan Chase & Co.	3	6	13	1	2.52
LPL Financial	1	1	10	0	2.75

JPMorgan Chase & Co. presently has a consensus price target of $288.68, suggesting a potential downside of 3.65%. LPL Financial has a consensus price target of $380.83, suggesting a potential downside of 4.55%. Given JPMorgan Chase & Co.’s higher possible upside, analysts clearly believe JPMorgan Chase & Co. is more favorable than LPL Financial.

Dividends

JPMorgan Chase & Co. pays an annual dividend of $5.60 per share and has a dividend yield of 1.9%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.3%. JPMorgan Chase & Co. pays out 28.7% of its earnings in the form of a dividend. LPL Financial pays out 8.3% 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. JPMorgan Chase & Co. has raised its dividend for 15 consecutive years. JPMorgan Chase & Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares JPMorgan Chase & Co. and LPL Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
JPMorgan Chase & Co.	20.52%	16.93%	1.30%
LPL Financial	8.23%	46.34%	10.36%

Insider and Institutional Ownership

71.6% of JPMorgan Chase & Co. shares are held by institutional investors. Comparatively, 95.7% of LPL Financial shares are held by institutional investors. 0.5% of JPMorgan Chase & Co. shares are held by insiders. Comparatively, 1.3% of LPL Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares JPMorgan Chase & Co. and LPL Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
JPMorgan Chase & Co.	$278.91 billion	2.99	$58.47 billion	$19.49	15.37
LPL Financial	$12.39 billion	2.58	$1.06 billion	$14.45	27.61

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

Summary

JPMorgan Chase & Co. beats LPL Financial on 11 of the 18 factors compared between the two stocks.

About JPMorgan Chase & Co.

JPMorgan Chase & Co. is a financial holding company, which engages in the provision of financial and investment banking services. It focuses on investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. It operates through the following segments: Consumer and Community Banking (CCB), Commercial and Investment Bank (CIB), Asset and Wealth Management (AWM), and Corporate. The CCB segment originates and services mortgage loans. The CIB segment makes markets and services clients across fixed income, foreign exchange, equities, and commodities. The AWM segment provides initial capital investments in products such as mutual funds and capital invested alongside third-party investors. The Corporate segment manages its liquidity, funding, capital, structural interest rate, and foreign exchange risks. The company was founded in 1799 and is headquartered in New York, NY.

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.