Critical Comparison: Intesa Sanpaolo (OTCMKTS:ISNPY) vs. Itau Unibanco (NYSE:ITUB)

Itau Unibanco (NYSE:ITUB) and Intesa Sanpaolo (OTCMKTS:ISNPY) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.

Analyst Recommendations

This is a breakdown of current recommendations for Itau Unibanco and Intesa Sanpaolo, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Itau Unibanco	0	1	2	1	3.00
Intesa Sanpaolo	0	3	1	1	2.60

Itau Unibanco currently has a consensus price target of $6.27, suggesting a potential downside of 14.54%. Given Itau Unibanco’s stronger consensus rating and higher probable upside, research analysts clearly believe Itau Unibanco is more favorable than Intesa Sanpaolo.

Earnings & Valuation

This table compares Itau Unibanco and Intesa Sanpaolo”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itau Unibanco	$62.19 billion	1.27	$7.62 billion	$0.71	10.34
Intesa Sanpaolo	$48.17 billion	2.44	$9.38 billion	$3.33	11.92

Intesa Sanpaolo has lower revenue, but higher earnings than Itau Unibanco. Itau Unibanco is trading at a lower price-to-earnings ratio than Intesa Sanpaolo, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

1.2% of Intesa Sanpaolo shares are owned by institutional investors. 0.6% of Itau Unibanco shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.4%. Intesa Sanpaolo pays an annual dividend of $1.68 per share and has a dividend yield of 4.2%. Itau Unibanco pays out 4.2% of its earnings in the form of a dividend. Intesa Sanpaolo pays out 50.5% 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.

Volatility & Risk

Itau Unibanco has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Intesa Sanpaolo has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500.

Profitability

This table compares Itau Unibanco and Intesa Sanpaolo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Itau Unibanco	14.05%	19.48%	1.48%
Intesa Sanpaolo	22.05%	13.27%	0.95%

About Itau Unibanco

Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It offers current account; loans; credit and debit cards; investment and commercial banking services; real estate lending services; financing and investment services; economic, financial and brokerage advisory; and leasing and foreign exchange services. The company also provides property and casualty insurance products covering loss, damage, or liabilities for assets or persons, as well as life insurance products covering death and personal accident. It serves retail customers, account and non-account holders, individuals and legal entities, high income clients, microenterprises, and small companies, as well as middle-market companies and high net worth clients. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.

About Intesa Sanpaolo

Intesa Sanpaolo S.p.A. provides various financial products and services primarily in Italy. It operates through six segments: Banca dei Territori, IMI Corporate & Investment Banking, International Subsidiary Banks, Asset Management, Private Banking, and Insurance. The company offers lending and deposit products; private and commercial banking, corporate and transaction banking, structured finance, investment banking, public finance, and capital markets; industrial credit, leasing, and factoring; asset management; life and non-life insurance and pension products; asset and wealth management; private investments; and bancassurance products. The company serves individuals, small and medium-sized businesses, non-profit customers, corporates and financial institutions, public administration, private clients and high net worth individuals, institutional clientele, and other customers. Intesa Sanpaolo S.p.A. was founded in 1998 and is headquartered in Turin, Italy.