Critical Analysis: BNP Paribas (OTCMKTS:BNPQY) vs. HSBC (NYSE:HSBC)

BNP Paribas (OTCMKTS:BNPQY) and HSBC (NYSE:HSBC) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, earnings, profitability, valuation, risk, institutional ownership and dividends.

Dividends

BNP Paribas pays an annual dividend of $2.01 per share and has a dividend yield of 4.2%. HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 3.1%. BNP Paribas pays out 37.7% of its earnings in the form of a dividend. HSBC pays out 39.2% 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. BNP Paribas is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares BNP Paribas and HSBC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BNP Paribas	22.65%	8.40%	0.40%
HSBC	13.48%	12.73%	0.81%

Volatility & Risk

BNP Paribas has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, HSBC has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for BNP Paribas and HSBC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BNP Paribas	1	0	3	1	2.80
HSBC	0	4	1	0	2.20

HSBC has a consensus price target of $63.00, indicating a potential downside of 1.28%. Given HSBC’s higher probable upside, analysts clearly believe HSBC is more favorable than BNP Paribas.

Insider and Institutional Ownership

1.2% of BNP Paribas shares are held by institutional investors. Comparatively, 1.5% of HSBC shares are held by institutional investors. 0.0% of HSBC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares BNP Paribas and HSBC”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BNP Paribas	$52.85 billion	2.06	$12.65 billion	$5.33	9.03
HSBC	$141.75 billion	1.57	$23.98 billion	$5.05	12.64

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

Summary

BNP Paribas beats HSBC on 9 of the 17 factors compared between the two stocks.

About BNP Paribas

BNP Paribas SA provides various banking and financial products and services in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. It operates through three divisions: Corporate & Institutional Banking; Commercial, Personal Banking & Services; and Investment & Protection Services. The Corporate & Institutional Banking division offers capital market, securities, investment banking, financing, risk management, cash management, and financial advisory services for corporate clients and institutional investors. The Commercial, Personal Banking & Services division provides financing and equipment leasing services, mobility, and digital banking services, as well as current accounts, savings products, bancassurance, insurance products and services, and consumer loans. The Investment & Protection Services division provides protection, savings, investment, and real estate services to support individuals, professionals, corporate clients, and institutions. The company was formerly known as Banque Nationale de Paris and changed its name to BNP Paribas SA in May 2000. BNP Paribas SA was founded in 1822 and is headquartered in Paris, France.

About HSBC

HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.