Financial Analysis: Erste Group Bank (OTCMKTS:EBKDY) vs. Banco Santander (Brasil) (NYSE:BSBR)

Banco Santander (Brasil) (NYSE:BSBR) and Erste Group Bank (OTCMKTS:EBKDY) are both large-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Institutional and Insider Ownership

14.5% of Banco Santander (Brasil) shares are owned by institutional investors. Comparatively, 0.4% of Erste Group Bank shares are owned by institutional investors. 0.1% of Banco Santander (Brasil) shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Banco Santander (Brasil) and Erste Group Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco Santander (Brasil)	0	2	1	0	2.33
Erste Group Bank	0	4	1	1	2.50

Banco Santander (Brasil) presently has a consensus target price of $5.35, suggesting a potential upside of 1.04%. Given Banco Santander (Brasil)’s higher probable upside, equities research analysts clearly believe Banco Santander (Brasil) is more favorable than Erste Group Bank.

Valuation and Earnings

This table compares Banco Santander (Brasil) and Erste Group Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco Santander (Brasil)	$48.52 billion	0.41	$1.89 billion	$0.81	6.54
Erste Group Bank	$24.18 billion	1.33	$3.24 billion	$3.86	10.17

Erste Group Bank has lower revenue, but higher earnings than Banco Santander (Brasil). Banco Santander (Brasil) is trading at a lower price-to-earnings ratio than Erste Group Bank, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Banco Santander (Brasil) has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Erste Group Bank has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500.

Profitability

This table compares Banco Santander (Brasil) and Erste Group Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco Santander (Brasil)	N/A	N/A	N/A
Erste Group Bank	15.21%	10.95%	0.93%

Dividends

Banco Santander (Brasil) pays an annual dividend of $0.18 per share and has a dividend yield of 3.4%. Erste Group Bank pays an annual dividend of $1.01 per share and has a dividend yield of 2.6%. Banco Santander (Brasil) pays out 22.2% of its earnings in the form of a dividend. Erste Group Bank pays out 26.2% 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. Banco Santander (Brasil) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Erste Group Bank beats Banco Santander (Brasil) on 10 of the 16 factors compared between the two stocks.

About Banco Santander (Brasil)

Banco Santander (Brasil) S.A., together with its subsidiaries, provides various banking products and services to individuals, small and medium enterprises, and corporate customers in Brazil and internationally. The company operates through Commercial Banking and Global Wholesale Banking segments. It offers local loans, commercial financing options, development bank funds, and cash management services; export and import financing, guarantees, structuring of asset services. In addition, the company provides financing and advisory services for infrastructure projects and capital markets instruments, as well as offers equity transactions and mergers and acquisitions services. Further, it offers foreign exchange products, derivatives, and investments to institutional investors, corporate clients, and individuals. Additionally, the company provides research services, as well as offers brokerage services for corporate, institutional, and individual investors. Furthermore, it provides deposits and other bank funding instruments, and debit and credit cards. The company provides financial services and products to its customers through multichannel distribution network comprising branches, mini-branches, ATMs, call centers, Internet banking, and mobile banking. Banco Santander (Brasil) S.A. was incorporated in 1985 and is headquartered in São Paulo, Brazil. The company operates as a subsidiary of Banco Santander, S.A.

About Erste Group Bank

Erste Group Bank AG provides a range of banking and other financial services to retail, corporate, and public sector customers. The company operates through Retail, Corporates, Group Markets, Asset/Liability Management & Local Corporate Center, Savings Banks, and Group Corporate Center segments. It provides mortgage and consumer loans, investment products, current accounts, savings products, and credit cards, as well as cross selling products, such as leasing, insurance, and building society products. The company also offers factoring and accounts receivable purchasing; investment, acquisition and leveraged, project, and commercial real estate finance; interest rate and currency hedging, letters of credit, documentary collections, and guarantees; account management, payments, digital-banking, cash logistics, and payment factory and cash pooling services; documentary collection, equity interests and investments, revolving export credits lines, letters of credit, customer financing, and export guarantee; and loan syndication, and debt and equity capital market services. In addition, it provides cash management, trade finance, customer referral, markets execution, debt capital markets, and custody and brokerage services. Further, the company offers corporate finance; portfolio management; trading and market; trade execution, market making, and short-term liquidity management; and asset/liability management services, as well as working capital and bridge loans. It operates in Austria, the Czech Republic, Slovakia, Romania, Hungary, Serbia, Croatia, and internationally. The company was founded in 1819 and is headquartered in Vienna, Austria.