Itau Unibanco (NYSE: ITUB) and Union Bankshares (NASDAQ:UBSH) are both financials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, profitability, institutional ownership and earnings.

Dividends

Itau Unibanco pays an annual dividend of $0.06 per share and has a dividend yield of 0.4%. Union Bankshares pays an annual dividend of $0.84 per share and has a dividend yield of 2.3%. Itau Unibanco pays out 5.4% of its earnings in the form of a dividend. Union Bankshares pays out 50.3% 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.

Insider and Institutional Ownership

4.9% of Itau Unibanco shares are owned by institutional investors. Comparatively, 65.0% of Union Bankshares shares are owned by institutional investors. 2.2% of Union Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Itau Unibanco and Union Bankshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Itau Unibanco 0 3 1 0 2.25
Union Bankshares 0 2 2 1 2.80

Itau Unibanco currently has a consensus price target of $14.25, indicating a potential downside of 7.89%. Union Bankshares has a consensus price target of $41.33, indicating a potential upside of 13.09%. Given Union Bankshares’ stronger consensus rating and higher possible upside, analysts clearly believe Union Bankshares is more favorable than Itau Unibanco.

Profitability

This table compares Itau Unibanco and Union Bankshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Itau Unibanco 21.51% 17.12% 1.76%
Union Bankshares 18.15% 8.12% 0.94%

Volatility & Risk

Itau Unibanco has a beta of 1.79, suggesting that its stock price is 79% more volatile than the S&P 500. Comparatively, Union Bankshares has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Valuation & Earnings

This table compares Itau Unibanco and Union Bankshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Itau Unibanco $34.80 billion 2.89 $6.67 billion $1.11 13.94
Union Bankshares $401.87 million 5.98 $72.92 million $1.67 21.89

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

Summary

Union Bankshares beats Itau Unibanco on 10 of the 17 factors compared between the two stocks.

Itau Unibanco Company Profile

Itau Unibanco Holding S.A. is a holding company. The Company provides a range of financial products and services to individual and corporate clients in Brazil and abroad. The Company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. The Retail Banking segment offers banking products and services to a diversified client base of account holders and non-account holders, individuals and companies. The Wholesale Banking segment offers products and services to middle-market companies, high-net worth clients (Private Banking) and institutional clients. The Company’s Activities with the Market + Corporation segment mainly manages the financial results associated with capital surplus, subordinated debt, and net debt of tax credits and debits. The Company provides banking activities, through its commercial, investment, real estate loan, finance and investment credit, and lease portfolios, including foreign exchange operations.

Union Bankshares Company Profile

Union Bankshares Corporation is a financial holding company and bank holding company. The Company operates through two segments: a community bank segment and mortgage loan origination business segment. The Company offers financial services through its community bank subsidiary, Union Bank & Trust (the Bank) and three non-bank financial services affiliates. The Company’s non-bank financial services affiliates include Union Mortgage Group, Inc. (UMG), Union Insurance Group, LLC and Old Dominion Capital Management, Inc. The community bank segment included one subsidiary bank, which provided loan, investment, and trust services to retail and commercial customers throughout its 151 banking office, 40 of which are operated as Xenith Bank, a division of Union Bank & Trust of Richmond, Virginia, as of January 1, 2018. The mortgage segment includes UMG, which provides a range of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area.

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