Critical Contrast: Credicorp (NYSE:BAP) and Banco Bradesco (NYSE:BBDO)

Banco Bradesco (NYSE:BBDO) and Credicorp (NYSE:BAP) are both large-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, dividends and analyst recommendations.

Earnings & Valuation

This table compares Banco Bradesco and Credicorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco Bradesco	$41.79 billion	0.80	$4.24 billion	$0.39	8.13
Credicorp	$8.01 billion	3.17	$1.94 billion	$24.31	13.15

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

Insider and Institutional Ownership

89.8% of Credicorp shares are held by institutional investors. 0.3% of Banco Bradesco shares are held by company insiders. Comparatively, 15.9% of Credicorp shares are held 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Banco Bradesco and Credicorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco Bradesco	0	0	1	0	3.00
Credicorp	0	3	4	0	2.57

Credicorp has a consensus price target of $297.60, indicating a potential downside of 6.87%. Given Credicorp’s higher possible upside, analysts plainly believe Credicorp is more favorable than Banco Bradesco.

Risk & Volatility

Banco Bradesco has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Credicorp has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Dividends

Banco Bradesco pays an annual dividend of $0.02 per share and has a dividend yield of 0.6%. Credicorp pays an annual dividend of $11.01 per share and has a dividend yield of 3.4%. Banco Bradesco pays out 5.1% of its earnings in the form of a dividend. Credicorp pays out 45.3% 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. Credicorp has increased its dividend for 3 consecutive years. Credicorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Banco Bradesco and Credicorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco Bradesco	9.85%	13.78%	1.11%
Credicorp	24.53%	20.43%	2.86%

Summary

Credicorp beats Banco Bradesco on 13 of the 17 factors compared between the two stocks.

About Banco Bradesco

Banco Bradesco S.A., together with its subsidiaries, provides various banking products and services to individuals, corporates, and businesses in Brazil and internationally. The company operates through two segments, Banking and Insurance. It provides current, savings, click, and salary accounts; real estate credit, vehicle financing, payroll loans, mortgage loans, microcredit, leasing, and personal and installment credit; overdraft and agribusiness loans; debit and business cards; financial and security services; consortium products; car, personal accident, dental, travel, and life insurance; investment products; pension products; foreign currency exchange services; capitalization bonds; and internet banking services. Banco Bradesco S.A. was founded in 1943 and is headquartered in Osasco, Brazil.

About Credicorp

Credicorp Ltd. provides various financial, insurance, and health services and products primarily in Peru and internationally. It operates through Universal Banking, Insurance and Pensions, Microfinance, and Investment Banking and Equity Management segments. The Universal Banking segment grants various credits and financial instruments to individuals and legal entities; and various deposits and current accounts. The Insurance and Pensions segment issues insurance policies to cover losses in commercial property, transport, marine vessels, automobiles, life, health, and pensions; and management services for private pension funds. The Microfinance segment provides management of loans, deposits, and current accounts for small and microenterprises. The Investment Banking and Equity Management segment is involved in provision of brokerage and investment management services for corporations, institutional investors, governments, and foundations; structuring and placement of issues in the primary market; execution and negotiation of transactions in the secondary market; and structuring of securitization processes for corporate customers and manages mutual funds. The company was founded in 1889 and is headquartered in Lima, Peru.