Financial Review: Banco Do Brasil (OTCMKTS:BDORY) versus Royal Bank Of Canada (NYSE:RY)

Banco Do Brasil (OTCMKTS:BDORY) and Royal Bank Of Canada (NYSE:RY) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Profitability

This table compares Banco Do Brasil and Royal Bank Of Canada’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco Do Brasil	4.99%	15.84%	1.21%
Royal Bank Of Canada	14.03%	16.12%	0.89%

Analyst Recommendations

This is a summary of current ratings for Banco Do Brasil and Royal Bank Of Canada, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco Do Brasil	0	2	1	0	2.33
Royal Bank Of Canada	0	6	5	0	2.45

Royal Bank Of Canada has a consensus target price of $177.50, suggesting a potential upside of 20.77%. Given Royal Bank Of Canada’s stronger consensus rating and higher possible upside, analysts plainly believe Royal Bank Of Canada is more favorable than Banco Do Brasil.

Dividends

Banco Do Brasil pays an annual dividend of $0.06 per share and has a dividend yield of 1.4%. Royal Bank Of Canada pays an annual dividend of $4.53 per share and has a dividend yield of 3.1%. Banco Do Brasil pays out 12.2% of its earnings in the form of a dividend. Royal Bank Of Canada pays out 47.8% 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. Royal Bank Of Canada has increased its dividend for 15 consecutive years. Royal Bank Of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Banco Do Brasil has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, Royal Bank Of Canada has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Earnings and Valuation

This table compares Banco Do Brasil and Royal Bank Of Canada”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco Do Brasil	$55.92 billion	0.44	$6.57 billion	$0.49	8.67
Royal Bank Of Canada	$98.71 billion	2.09	$11.92 billion	$9.47	15.52

Royal Bank Of Canada has higher revenue and earnings than Banco Do Brasil. Banco Do Brasil is trading at a lower price-to-earnings ratio than Royal Bank Of Canada, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

0.0% of Banco Do Brasil shares are held by institutional investors. Comparatively, 45.3% of Royal Bank Of Canada shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Royal Bank Of Canada beats Banco Do Brasil on 14 of the 16 factors compared between the two stocks.

About Banco Do Brasil

Banco do Brasil S.A. provides banking products and services for individuals, companies, and public sectors in Brazil and internationally. The company's Banking segment offers various products and services, including deposits, loans, and services to retail, wholesale, and public sector markets, as well as to micro-entrepreneurs and the low income population. Its Investments segment engages in the intermediation and distribution of debts in the primary and secondary markets; equity investment activities; and rendering of financial services. The company's Fund Management segment is involved in the purchase, sale, and custody of securities, as well as the management of portfolios, and investment funds and clubs. Its Insurance, Pension and Capitalization segment provides life, property, and automobile insurance products, as well as private pension and capitalization plans. The company's Payment Methods segment is involved in the funding, transmission, processing, and settlement of transactions through electronic means. Its Other segment engages in the provision of credit recovery and consortium administration services; development, manufacturing, leasing, and integration of digital electronic systems and equipment, peripherals, programs, inputs, and computing supplies; intermediation of air tickets; and lodging and organization of events. Banco do Brasil S.A. was founded in 1808 and is headquartered in Brasa­lia, Brazil.

About Royal Bank Of Canada

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of wealth, investment, trust, banking, credit, and other advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients; asset management products to institutional and individual clients; and asset and investor services to financial institutions, asset managers, and asset owners. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, property and casualty, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital platforms; and independent brokers and partners. The company's Capital Markets segment offers advisory and origination, sales and trading, lending and financing, and transaction banking services to corporations, institutional clients, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.