Contrasting HSBC Holdings PLC (NYSE:HSBC) & Financial Institutions (FISI)

HSBC Holdings PLC (NYSE: HSBC) and Financial Institutions (NASDAQ:FISI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, profitabiliy, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares HSBC Holdings PLC and Financial Institutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HSBC Holdings PLC 1.42% 2.08% 0.16%
Financial Institutions 20.08% 10.03% 0.83%

Dividends

HSBC Holdings PLC pays an annual dividend of $2.00 per share and has a dividend yield of 4.2%. Financial Institutions pays an annual dividend of $0.84 per share and has a dividend yield of 3.1%. HSBC Holdings PLC pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Financial Institutions pays out 41.0% of its earnings in the form of a dividend. HSBC Holdings PLC has raised its dividend for 3 consecutive years. HSBC Holdings PLC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

2.3% of HSBC Holdings PLC shares are held by institutional investors. Comparatively, 61.1% of Financial Institutions shares are held by institutional investors. 5.5% of Financial Institutions shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

HSBC Holdings PLC has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Financial Institutions has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for HSBC Holdings PLC and Financial Institutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HSBC Holdings PLC 0 6 4 0 2.40
Financial Institutions 0 2 1 0 2.33

HSBC Holdings PLC currently has a consensus price target of $27.00, suggesting a potential downside of 43.97%. Financial Institutions has a consensus price target of $32.25, suggesting a potential upside of 17.70%. Given Financial Institutions’ higher possible upside, analysts clearly believe Financial Institutions is more favorable than HSBC Holdings PLC.

Valuation & Earnings

This table compares HSBC Holdings PLC and Financial Institutions’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
HSBC Holdings PLC $42.96 billion 4.52 $2.01 billion $0.50 96.38
Financial Institutions $127.68 million 3.15 $30.06 million $2.05 13.37

HSBC Holdings PLC has higher revenue and earnings than Financial Institutions. Financial Institutions is trading at a lower price-to-earnings ratio than HSBC Holdings PLC, indicating that it is currently the more affordable of the two stocks.

Summary

Financial Institutions beats HSBC Holdings PLC on 9 of the 17 factors compared between the two stocks.

HSBC Holdings PLC Company Profile

HSBC Holdings plc (HSBC) is the banking and financial services company. The Company manages its products and services through four businesses: Retail Banking and Wealth Management (RBWM), Commercial Banking (CMB), Global Banking and Markets (GB&M), and Global Private Banking (GPB). It operates across various geographical regions, which include Europe, Asia, Middle East and North Africa, North America and Latin America. RBWM business offers Retail Banking, Wealth Management, Asset Management and Insurance. CMB services include working capital, term loans, payment services and international trade facilitation, among other services, as well as expertise in mergers and acquisitions, and access to financial markets. GB&M supports government, corporate and institutional clients across the world. GPB’s products and services include Investment Management, Private Wealth Solutions, and a range of Private Banking services.

Financial Institutions Company Profile

Financial Institutions, Inc. is a financial holding company. The Company conducts its business through its subsidiaries: Five Star Bank (the Bank), a New York chartered bank; Scott Danahy Naylon, LLC (SDN), a full service insurance agency, and Courier Capital, LLC (Courier Capital), an investment advisory and wealth management company. The Company operates through two segments: Banking and Non-Banking. The Banking segment includes all of the Company’s retail and commercial banking operations. The Non-Banking segment includes the activities of SDN and Courier Capital. The Company offers a range of banking and related financial services to consumer, commercial and municipal customers through its bank and nonbank subsidiaries. The Company’s indirect lending network includes relationships with franchised automobile dealers in Western and Central New York, the Capital District of New York and Northern and Central Pennsylvania.

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