Critical Comparison: Hennessy Advisors (NASDAQ:HNNA) & XP (NASDAQ:XP)
by Doug Wharley · The Cerbat GemXP (NASDAQ:XP – Get Free Report) and Hennessy Advisors (NASDAQ:HNNA – Get Free Report) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitability.
Dividends
XP pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Hennessy Advisors pays an annual dividend of $0.60 per share and has a dividend yield of 5.8%. XP pays out 20.9% of its earnings in the form of a dividend. Hennessy Advisors pays out 57.7% 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.
Risk & Volatility
XP has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Hennessy Advisors has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations for XP and Hennessy Advisors, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| XP | 0 | 2 | 5 | 0 | 2.71 |
| Hennessy Advisors | 0 | 1 | 0 | 0 | 2.00 |
XP presently has a consensus target price of $28.80, indicating a potential downside of 5.33%. Given XP’s stronger consensus rating and higher possible upside, equities analysts plainly believe XP is more favorable than Hennessy Advisors.
Valuation and Earnings
This table compares XP and Hennessy Advisors”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| XP | $3.30 billion | 4.96 | $925.91 million | $1.91 | 15.93 |
| Hennessy Advisors | $35.54 million | 2.30 | $9.96 million | $1.04 | 9.95 |
XP has higher revenue and earnings than Hennessy Advisors. Hennessy Advisors is trading at a lower price-to-earnings ratio than XP, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares XP and Hennessy Advisors’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| XP | 27.20% | 22.19% | 1.33% |
| Hennessy Advisors | 24.77% | 8.31% | 5.48% |
Institutional & Insider Ownership
59.2% of XP shares are held by institutional investors. Comparatively, 10.3% of Hennessy Advisors shares are held by institutional investors. 36.0% of Hennessy Advisors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Summary
XP beats Hennessy Advisors on 13 of the 16 factors compared between the two stocks.
About XP
XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.
About Hennessy Advisors
Hennessy Advisors, Inc. is an employee owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.