Financial Analysis: Swedbank (OTCMKTS:SWDBY) versus Svenska Handelsbanken Ab Publ (OTCMKTS:SVNLY)

Swedbank (OTCMKTS:SWDBY) and Svenska Handelsbanken Ab Publ (OTCMKTS:SVNLY) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Valuation & Earnings

This table compares Swedbank and Svenska Handelsbanken Ab Publ”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Swedbank	$17.47 billion	1.99	$3.30 billion	SEK 2.90	10.65
Svenska Handelsbanken Ab Publ	$17.44 billion	N/A	$2.60 billion	$0.62	10.44

Swedbank has higher revenue and earnings than Svenska Handelsbanken Ab Publ. Svenska Handelsbanken Ab Publ is trading at a lower price-to-earnings ratio than Swedbank, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Swedbank and Svenska Handelsbanken Ab Publ, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Swedbank	2	3	0	0	1.60
Svenska Handelsbanken Ab Publ	2	5	0	0	1.71

Risk and Volatility

Swedbank has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Svenska Handelsbanken Ab Publ has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Profitability

This table compares Swedbank and Svenska Handelsbanken Ab Publ’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Swedbank	25.22%	16.12%	1.09%
Svenska Handelsbanken Ab Publ	15.97%	13.07%	0.70%

Dividends

Swedbank pays an annual dividend of SEK 2.03 per share and has a dividend yield of 6.6%. Svenska Handelsbanken Ab Publ pays an annual dividend of $0.60 per share and has a dividend yield of 9.3%. Swedbank pays out 70.0% of its earnings in the form of a dividend. Svenska Handelsbanken Ab Publ pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Swedbank beats Svenska Handelsbanken Ab Publ on 8 of the 11 factors compared between the two stocks.

About Swedbank

Swedbank AB (publ) provides various banking products and services to private and corporate customers in Sweden, Estonia, Latvia, Lithuania, Norway, the United States, Finland, Denmark, Luxembourg, and China. The company operates through three business areas: Swedish Banking, Baltic Banking, and Corporates and Institutions. It offers savings accounts, mutual funds and insurance savings, pension savings, institutional asset management, and other savings and investment products; private residential lending, consumer financing, corporate lending, leasing, and other financing products, as well as trade finance and factoring services; and current accounts, cash handling, debit and credit cards, and card acquiring, as well as domestic, international, mobile, document, and other payment products. The company also provides equity trading, structured products, corporate finance, custody services, fixed income and currency trading, and other capital market products; and administrative services, treasury operations, real estate brokerage and management services, legal services, safe deposit boxes, and other services. In addition, it offers pension insurance and plan, life, endowment insurance, and personal insurance products; investment management, investment banking, and mortgage lending services; and transaction banking services comprising cash management, securities, account, and clearing and settlement services, as well as Internet and mobile banking services. The company was formerly known as ForeningsSparbanken AB and changed its name to Swedbank AB (publ) in September 2006. Swedbank AB (publ) was founded in 1820 and is headquartered in Sundbyberg, Sweden.

About Svenska Handelsbanken Ab Publ

Svenska Handelsbanken AB (publ) provides various banking products and services for private and corporate customers primarily in Sweden, the United Kingdom, Norway, the Netherlands, the United States, Luxembourg, Finland, and Poland. The company offers savings, transactions, business, currency, and investment accounts, as well as accounts for cash pool, and forestry and agriculture; mortgage and committed loans, and private loans; mutual funds; pension products; credit and debit cards; and payment and reconciliation services, as well as foreign exchange rate services. It also provides financing for investments, such as equipment, cars, computers, and other inventories, as well as vehicle and real estate financing services; green loans and advisor services; investment and other financing services; medical care, and group and health insurance products; forestry and farming banking products; and online and mobile banking services, as well as various banking services for children and young people. In addition, the company offers financial services, that includes asset management, transactional banking, corporate finance, financing, markets, trade finance, market information and research services to large corporations; cash management solutions; and various corporate banking services to small and medium-sized companies and large corporates, as well as private banking services. Svenska Handelsbanken AB (publ) was incorporated in 1871 and is headquartered in Stockholm, Sweden.