Reviewing Stifel Financial (NYSE:SF) & Moody’s (NYSE:MCO)

Moody’s (NYSE:MCO) and Stifel Financial (NYSE:SF) are both large-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.

Dividends

Moody’s pays an annual dividend of $4.12 per share and has a dividend yield of 0.9%. Stifel Financial pays an annual dividend of $1.36 per share and has a dividend yield of 1.7%. Moody’s pays out 26.1% of its earnings in the form of a dividend. Stifel Financial pays out 24.3% 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. Moody’s has increased its dividend for 16 consecutive years and Stifel Financial has increased its dividend for 9 consecutive years. Stifel Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

92.1% of Moody’s shares are held by institutional investors. Comparatively, 82.0% of Stifel Financial shares are held by institutional investors. 0.1% of Moody’s shares are held by company insiders. Comparatively, 3.4% of Stifel Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Moody’s and Stifel Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moody’s	$7.72 billion	10.48	$2.46 billion	$15.77	29.63
Stifel Financial	$5.53 billion	2.18	$683.78 million	$5.59	14.26

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Moody’s and Stifel Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	5	14	1	2.80
Stifel Financial	0	4	5	0	2.56

Moody’s currently has a consensus target price of $553.61, indicating a potential upside of 18.50%. Stifel Financial has a consensus target price of $91.90, indicating a potential upside of 15.30%. Given Moody’s’ stronger consensus rating and higher probable upside, equities analysts clearly believe Moody’s is more favorable than Stifel Financial.

Volatility and Risk

Moody’s has a beta of 1.34, suggesting that its stock price is 34% more volatile than the S&P 500. Comparatively, Stifel Financial has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Profitability

This table compares Moody’s and Stifel Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moody’s	34.25%	80.35%	19.38%
Stifel Financial	16.11%	19.22%	2.36%

Summary

Moody’s beats Stifel Financial on 15 of the 18 factors compared between the two stocks.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.

About Stifel Financial

Stifel Financial Corp., a financial services and bank holding company, provides retail and institutional wealth management, and investment banking services to individual investors, corporations, municipalities, and institutions in the United States and internationally. It operates in three segments: Global Wealth Management, Institutional Group, and Other. The company provides private client services, including securities transaction and financial planning services; institutional equity and fixed income sales, trading and research, and municipal finance services; investment banking services, such as mergers and acquisitions, public offerings, and private placements; and retail and commercial banking services comprising personal and commercial lending programs, as well as deposit accounts. It participates in and manages underwritings for corporate and public finance; and offers financial advisory and securities brokerage services. The company was founded in 1890 and is headquartered in Saint Louis, Missouri.