KCG Holdings, Inc. Class A (NYSE: KCG) and GFI Group (OTCMKTS:GFIG) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, dividends, analyst recommendations, valuation, profitability and earnings.
Institutional and Insider Ownership
82.4% of KCG Holdings, Inc. Class A shares are owned by institutional investors. 9.4% of KCG Holdings, Inc. Class A shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This table compares KCG Holdings, Inc. Class A and GFI Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|KCG Holdings, Inc. Class A||16.25%||15.36%||3.35%|
Earnings and Valuation
This table compares KCG Holdings, Inc. Class A and GFI Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|KCG Holdings, Inc. Class A||N/A||N/A||N/A||$2.61||7.66|
GFI Group is trading at a lower price-to-earnings ratio than KCG Holdings, Inc. Class A, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
KCG Holdings, Inc. Class A has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500. Comparatively, GFI Group has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for KCG Holdings, Inc. Class A and GFI Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|KCG Holdings, Inc. Class A||0||3||0||0||2.00|
KCG Holdings, Inc. Class A currently has a consensus price target of $20.00, indicating a potential upside of 0.00%. Given KCG Holdings, Inc. Class A’s higher probable upside, analysts clearly believe KCG Holdings, Inc. Class A is more favorable than GFI Group.
KCG Holdings, Inc. Class A beats GFI Group on 6 of the 8 factors compared between the two stocks.
About KCG Holdings, Inc. Class A
KCG Holdings, Inc. is a holding company. The Company is an independent securities company offering investors a range of services designed to address trading needs across asset classes, product types and time zones. The Company combines technology with client service across market making, agency execution and venues. It has multiple access points to trade global equities, fixed income, currencies and commodities via voice or automated execution. The Company serves clients and operates in the markets through three primary businesses, which includes Market Making, Global Execution Services and Venues. In July 2013, the Company announced the completion of the merger whereby Knight Capital Group, Inc. and GETCO Holding Company, LLC had been combined as part of KCG Holdings, Inc.
About GFI Group
GFI Group Inc. is an intermediary and provider of trading technologies and support services to the global over-the-counter (OTC) and listed markets. The Company provides brokerage and trade execution services, clearing services, market data and trading platform and other software products to institutional customers. It has four segments: Americas Brokerage; Europe, the Middle East and Africa (EMEA) Brokerage; Asia Brokerage, and Clearing and Backed Trading. The Company’s brokerage operations provide brokerage services in four broad product categories: fixed income, financial, equity and commodity. The Company’s Clearing and Backed Trading segment offers clearing, risk management, settlement and other back-office services, as well as provides capital to start-up trading groups, small hedge funds, market-makers and individual traders. The Company is also engaged in cash bond and futures contracts brokerage services, clearing services and analytical and trading software businesses.
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