Acadian Asset Management (NYSE:AAMI) versus LPL Financial (NASDAQ:LPLA) Critical Contrast

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

Earnings and Valuation

This table compares Acadian Asset Management 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
Acadian Asset Management	$668.50 million	4.63	$80.00 million	$2.83	30.81
LPL Financial	$16.99 billion	1.58	$863.02 million	$12.54	27.25

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Acadian Asset Management and LPL Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Acadian Asset Management	0	4	1	0	2.20
LPL Financial	0	5	12	0	2.71

Acadian Asset Management presently has a consensus target price of $81.67, suggesting a potential downside of 6.35%. LPL Financial has a consensus target price of $405.79, suggesting a potential upside of 18.74%. Given LPL Financial’s stronger consensus rating and higher probable upside, analysts plainly believe LPL Financial is more favorable than Acadian Asset Management.

Risk & Volatility

Acadian Asset Management has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Dividends

Acadian Asset Management pays an annual dividend of $0.40 per share and has a dividend yield of 0.5%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. Acadian Asset Management pays out 14.1% 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.

Profitability

This table compares Acadian Asset Management and LPL Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Acadian Asset Management	15.17%	189.32%	21.26%
LPL Financial	5.13%	32.20%	9.35%

Institutional & Insider Ownership

98.7% of Acadian Asset Management shares are held by institutional investors. Comparatively, 95.7% of LPL Financial shares are held by institutional investors. 22.6% of Acadian Asset Management shares are held by company insiders. Comparatively, 0.6% of LPL Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Acadian Asset Management beats LPL Financial on 9 of the 16 factors compared between the two stocks.

About Acadian Asset Management

Acadian Asset Management Inc. is a publically owned asset management holding company. The firm provides its services to individuals and institutions. It manages separate client focused portfolios through its subsidiaries. The firm also launches equity mutual funds for its clients. It invests in public equity, fixed income, and alternative investment markets through its subsidiaries. The firm was founded in 1980 is based Boston, Massachusetts. It was formally known as BrightSphere Investment Group plc. BrightSphere Investment Group Inc. was formed in 1980 and is based in Boston, Massachusetts.

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.