HeadHead Review: TD Ameritrade (AMTD) vs. Goldman Sachs Group (GS)


TD Ameritrade (NASDAQ: AMTD) and Goldman Sachs Group (NYSE:GS) are both large-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.

Insider and Institutional Ownership

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91.8% of TD Ameritrade shares are owned by institutional investors. Comparatively, 72.4% of Goldman Sachs Group shares are owned by institutional investors. 0.4% of TD Ameritrade shares are owned by company insiders. Comparatively, 2.6% of Goldman Sachs Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.


Earnings & Valuation

This table compares TD Ameritrade and Goldman Sachs Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TD Ameritrade $3.68 billion 9.18 $872.00 million $1.84 32.32
Goldman Sachs Group $32.07 billion 2.68 $4.29 billion $19.76 11.53

Goldman Sachs Group has higher revenue and earnings than TD Ameritrade. Goldman Sachs Group is trading at a lower price-to-earnings ratio than TD Ameritrade, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for TD Ameritrade and Goldman Sachs Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TD Ameritrade 1 4 13 0 2.67
Goldman Sachs Group 2 10 10 0 2.36

TD Ameritrade presently has a consensus target price of $64.18, indicating a potential upside of 7.93%. Goldman Sachs Group has a consensus target price of $267.44, indicating a potential upside of 17.39%. Given Goldman Sachs Group’s higher possible upside, analysts clearly believe Goldman Sachs Group is more favorable than TD Ameritrade.

Volatility and Risk

TD Ameritrade has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, Goldman Sachs Group has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.


Dividends

TD Ameritrade pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. Goldman Sachs Group pays an annual dividend of $3.20 per share and has a dividend yield of 1.4%. TD Ameritrade pays out 45.7% of its earnings in the form of a dividend. Goldman Sachs Group pays out 16.2% 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. Goldman Sachs Group has raised its dividend for 6 consecutive years.

Profitability


This table compares TD Ameritrade and Goldman Sachs Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TD Ameritrade 22.02% 19.66% 3.72%
Goldman Sachs Group 14.27% 12.58% 0.99%

Summary

TD Ameritrade beats Goldman Sachs Group on 9 of the 16 factors compared between the two stocks.

About TD Ameritrade


TD Ameritrade Holding Corporation provides securities brokerage and related technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. Its products and services include tdameritrade.com, a Web platform for self-directed retail investors; Trade Architect, a Web-based platform for investors and traders to identify opportunities and stay informed; thinkorswim, a desktop platform for traders; and TD Ameritrade Mobile, which allows on-the-go investors and traders to trade and monitor accounts. The company also offers TD Ameritrade Institutional that provides brokerage and custody services to approximately 6,000 independent RIAs and their clients; TD Ameritrade Education, which allows investor education for stocks, options, income investing, and portfolio management; TD Ameritrade's Goal Planning that offers investment consulting and planning services; Selective Portfolios, an advisory service, which develops portfolios of exchange-traded funds (ETFs) and mutual funds; AdvisorDirect, a national referral service for investors; TD Ameritrade Singapore Pte. Ltd. that enables retail investors in Singapore to trade the U.S. markets; and TD Ameritrade Corporate Services, which provide self-directed brokerage services to employees of corporations. In addition, it offers various retail brokerage products and services, such as common and preferred stocks; ETFs; options; futures; foreign exchange; mutual funds; fixed income products; primary and secondary offerings of fixed income securities, closed-end funds, and preferred stocks; margin lending; cash management services; and annuities. The company provides its services primarily through the Internet, a network of retail branches, mobile trading applications, interactive voice response, and registered representatives through telephone. TD Ameritrade Holding Corporation was founded in 1971 and is headquartered in Omaha, Nebraska.


About Goldman Sachs Group

The Goldman Sachs Group, Inc. operates as an investment banking, securities, and investment management company worldwide. It operates through four segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, spin-offs, and risk management; and underwriting services, such as debt and equity underwriting of public offerings and private placements of various securities and other financial instruments, as well as derivative transactions with public and private sector clients. The Institutional Client Services segment is involved in client execution activities related to making markets in cash and derivative instruments for interest rate products, credit products, mortgages, currencies, commodities, and equities; and provision of securities services comprising financing, securities lending, and other prime brokerage services, as well as markets in and clears client transactions on primary stock, options, and futures exchanges. The Investing & Lending segment invests in and originates longer-term loans to provide financing to clients; and makes investments in debt securities and loans, public and private equity securities, and infrastructure and real estate entities, as well as provides unsecured and secured loans to retail clients through its digital platforms. The Investment Management segment offers investment management products and services; and wealth advisory services consisting of portfolio management, financial planning and counseling, and brokerage and other transaction services. The company serves corporations, financial institutions, governments, and individuals. The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York, New York.

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