Nomura (NYSE:NMR) and Bank of America (NYSE:BAC) Critical Comparison

Bank of America (NYSE:BAC) and Nomura (NYSE:NMR) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, earnings, risk, valuation, analyst recommendations, profitability and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Bank of America and Nomura, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of America	0	5	23	0	2.82
Nomura	0	1	0	1	3.00

Bank of America currently has a consensus target price of $57.86, indicating a potential upside of 8.40%. Given Bank of America’s higher possible upside, equities research analysts plainly believe Bank of America is more favorable than Nomura.

Volatility & Risk

Bank of America has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Nomura has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Dividends

Bank of America pays an annual dividend of $1.12 per share and has a dividend yield of 2.1%. Nomura pays an annual dividend of $0.37 per share and has a dividend yield of 5.2%. Bank of America pays out 30.5% of its earnings in the form of a dividend. Nomura pays out 44.6% 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 Nomura’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of America	15.70%	10.76%	0.88%
Nomura	8.07%	10.23%	0.63%

Institutional and Insider Ownership

70.7% of Bank of America shares are owned by institutional investors. Comparatively, 15.1% of Nomura shares are owned by institutional investors. 0.3% of Bank of America shares are owned by insiders. Comparatively, 0.0% of Nomura shares are owned by 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 & Valuation

This table compares Bank of America and Nomura”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of America	$107.26 billion	3.63	$27.13 billion	$3.67	14.54
Nomura	$1,760.37 billion	0.01	$2.25 billion	$0.83	8.51

Bank of America has higher earnings, but lower revenue than Nomura. Nomura 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.

Summary

Bank of America beats Nomura on 14 of the 18 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 Nomura

Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Retail, Investment Management, and Wholesale. The Retail segment offers various financial products and investment consultation services. The Investment Management segment engages in the management of funds, investment trusts, and other investment solutions; and provision of investment advisory, custodial, and administrative services. The Wholesale segment is involved in the research, sale, trading, agency execution, and market-making of fixed income and equity-related products. This segment also engages in underwriting various securities and other financial instruments, such as various classes of shares, convertible and exchangeable securities, investment grade and high yield debts, sovereign and emerging market debts, structured securities, and other securities; arranging private placements, as well as other capital raising activities; and the provision of financial advisory services on business transactions comprising mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts, and risk solutions. The company was formerly known as The Nomura Securities Co., Ltd. and changed its name to Nomura Holdings, Inc. in October 2001. Nomura Holdings, Inc. was incorporated in 1925 and is headquartered in Tokyo, Japan.