Reviewing Bank of America (NYSE:BAC) & Diamond Hill Investment Group (NASDAQ:DHIL)

Bank of America (NYSE:BAC) and Diamond Hill Investment Group (NASDAQ:DHIL) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Insider & Institutional Ownership

70.7% of Bank of America shares are owned by institutional investors. Comparatively, 65.5% of Diamond Hill Investment Group shares are owned by institutional investors. 0.3% of Bank of America shares are owned by company insiders. Comparatively, 4.6% of Diamond Hill Investment Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Bank of America and Diamond Hill Investment Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of America	$192.43 billion	1.75	$27.13 billion	$3.42	13.29
Diamond Hill Investment Group	$151.10 million	2.56	$43.18 million	$17.58	8.06

Bank of America has higher revenue and earnings than Diamond Hill Investment Group. Diamond Hill Investment Group is trading at a lower price-to-earnings ratio than Bank of America, indicating that it is currently the more affordable of the two stocks.

Dividends

Bank of America pays an annual dividend of $1.04 per share and has a dividend yield of 2.3%. Diamond Hill Investment Group pays an annual dividend of $6.00 per share and has a dividend yield of 4.2%. Bank of America pays out 30.4% of its earnings in the form of a dividend. Diamond Hill Investment Group pays out 34.1% 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. Bank of America has increased its dividend for 11 consecutive years.

Profitability

This table compares Bank of America and Diamond Hill Investment Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of America	14.81%	10.25%	0.84%
Diamond Hill Investment Group	31.71%	21.38%	14.72%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Bank of America and Diamond Hill Investment Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of America	0	5	17	0	2.77
Diamond Hill Investment Group	0	0	0	0	0.00

Bank of America presently has a consensus price target of $50.1250, suggesting a potential upside of 10.32%. Given Bank of America’s stronger consensus rating and higher possible upside, research analysts plainly believe Bank of America is more favorable than Diamond Hill Investment Group.

Risk & Volatility

Bank of America has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Diamond Hill Investment Group has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Summary

Bank of America beats Diamond Hill Investment Group on 10 of the 17 factors compared between the two stocks.

About Bank of America

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates in four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, non-interest and interest-bearing checking accounts, and investment accounts and products; credit and debit cards; residential mortgages, and home equity loans; and direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The GWIM segment provides investment management, brokerage, banking, and trust and retirement products and services; wealth management solutions; and customized solutions, including specialty asset management services. The Global Banking segment offers lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, short-term investing options, and merchant services; working capital management solutions; debt and equity underwriting and distribution, and merger-related and other advisory services; and fixed-income and equity research, and certain market-based services. The Global Markets segment provides market-making, financing, securities clearing, settlement, and custody services; securities and derivative products; and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1784 and is based in Charlotte, North Carolina.

About Diamond Hill Investment Group

Diamond Hill Investment Group, Inc., through its subsidiary, Diamond Hill Capital Management, Inc., provides investment advisory and fund administration services in the United States. It offers investment advisory and related services to clients through pooled vehicles, such as private fund; separately managed accounts; collective investment trusts; and other pooled vehicles, including sub-advised funds and model delivery programs. The company also provides fund administration services comprising portfolio and regulatory compliance, treasury and financial oversight, and general business management and governance of the funds, as well as oversight of back-office service providers, which include the custodian, fund accountant, and transfer agent. Diamond Hill Investment Group, Inc. was incorporated in 1990 and is based in Columbus, Ohio.