Financial Survey: Banco Santander (NYSE:SAN) & FirstRand (OTCMKTS:FANDF)

FirstRand (OTCMKTS:FANDF) and Banco Santander (NYSE:SAN) are both financial services 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.

Profitability

This table compares FirstRand and Banco Santander’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstRand	N/A	N/A	N/A
Banco Santander	18.51%	10.38%	0.59%

Institutional & Insider Ownership

2.1% of Banco Santander shares are held by institutional investors. 9.5% of Banco Santander 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.

Analyst Ratings

This is a breakdown of recent ratings and target prices for FirstRand and Banco Santander, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstRand	0	1	0	0	2.00
Banco Santander	0	2	1	0	2.33

Dividends

FirstRand pays an annual dividend of $1.17 per share and has a dividend yield of 36.0%. Banco Santander pays an annual dividend of $0.11 per share and has a dividend yield of 2.9%. FirstRand pays out 39.7% of its earnings in the form of a dividend. Banco Santander pays out 16.7% 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. Banco Santander has increased its dividend for 1 consecutive years.

Earnings & Valuation

This table compares FirstRand and Banco Santander’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstRand	N/A	N/A	N/A	$2.94	1.10
Banco Santander	$58.55 billion	1.05	$10.12 billion	$0.66	5.74

Banco Santander has higher revenue and earnings than FirstRand. FirstRand is trading at a lower price-to-earnings ratio than Banco Santander, indicating that it is currently the more affordable of the two stocks.

Summary

Banco Santander beats FirstRand on 11 of the 13 factors compared between the two stocks.

About FirstRand

FirstRand Limited, together with its subsidiaries, provides transactional, lending, investment, and insurance products and services in South Africa, rest of Africa, the United Kingdom, Europe, Asia, the United States, and Australia. The company offers deposit and savings products; personal loans; and asset and invoice finance, as well as SME commercial, residential, and buy-to-let mortgages. It also provides life and short-term insurance products; and vehicle finance, instalment credit and fleet management, and corporate and investment banking services. In addition, the company offers asset management, as well as vehicle-related insurance services. It serves retail and public sector customers, SMEs, business, agricultural, and medium corporates. The company was incorporated in 1966 and is based in Sandton, South Africa.

About Banco Santander

Banco Santander, S.A. provides various retail and commercial banking products and services to individuals, small and medium-sized enterprises, and large companies worldwide. The company operates through Retail Banking, Santander Corporate & Investment Banking, Wealth Management & Insurance, and PagoNxt segments. It offers demand and time deposits, and current and savings accounts; mortgages, consumer finance, syndicated corporate loans, cash management, export and agency finance, trade and working capital solutions, and corporate finance; and insurance products. The company also provides cash, asset, and wealth management; and private banking services. In addition, it is involved in the corporate banking, treasury, risk hedging, foreign trade, and investment banking activities, as well as provides digital payment solutions. The company was formerly known as Banco Santander Central Hispano S.A. and changed its name to Banco Santander, S.A. in June 2007. Banco Santander, S.A. was founded in 1856 and is headquartered in Madrid, Spain.