HDFC Bank (NYSE:HDB) and Avidbank (OTCMKTS:AVBH) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Insider and Institutional Ownership

19.4% of HDFC Bank shares are held by institutional investors. Comparatively, 6.6% of Avidbank shares are held by institutional investors. 1.0% of HDFC Bank shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares HDFC Bank and Avidbank’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HDFC Bank $16.56 billion 5.39 $3.18 billion $3.32 31.24
Avidbank $45.30 million 3.03 $11.12 million N/A N/A

HDFC Bank has higher revenue and earnings than Avidbank.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for HDFC Bank and Avidbank, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HDFC Bank 0 2 0 0 2.00
Avidbank 0 0 0 0 N/A

HDFC Bank currently has a consensus target price of $128.63, indicating a potential upside of 24.00%. Given HDFC Bank’s higher possible upside, research analysts plainly believe HDFC Bank is more favorable than Avidbank.

Risk and Volatility

HDFC Bank has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500. Comparatively, Avidbank has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500.

Profitability

This table compares HDFC Bank and Avidbank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HDFC Bank 17.98% 13.23% 1.63%
Avidbank 24.67% 12.24% 1.35%

Dividends

HDFC Bank pays an annual dividend of $0.82 per share and has a dividend yield of 0.8%. Avidbank does not pay a dividend. HDFC Bank pays out 24.7% of its earnings in the form of a dividend. HDFC Bank has raised its dividend for 6 consecutive years.

Summary

HDFC Bank beats Avidbank on 12 of the 14 factors compared between the two stocks.

HDFC Bank Company Profile

HDFC Bank Limited provides a range of banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in Treasury, Retail Banking, Wholesale Banking, and Other Banking Business segments. It accepts savings accounts, salary accounts, current accounts, fixed and recurring deposits, demat accounts, safe deposit lockers, and rural accounts, as well as offshore accounts and deposits. The company also offers personal, business, home, consumer durable, car, two wheeler, gold, educational, rural, and term loans; loans for professionals; loans against property, securities, and assets; overdrafts; government sponsored programs; and working capital, healthcare, channel, short term, structured, dealer, and vendor finance, as well as agricultural lending. In addition, it provides credit, debit, and prepaid cards; private banking services; export, import, remittance, bank guarantees, and letter of credit services, as well as merchant and cash management services; life, health, motor, travel, and home insurance products; and investment products, such as mutual funds, equities and derivatives, IPOs, and bonds. Further, the company offers bill discounting, real time gross settlement, bankers to right/public issue, forex, money market, employees trusts, and tax collection services; and investment banking services in the areas of project appraisal, structured finance, loan syndication, debt capital markets, equity placement, mergers and acquisitions, corporate advisory, and capital market advisory services. Additionally, it provides correspondent banking, settlement, custodial, disbursement, clearing, and administrative and fiduciary support services, as well as online and mobile banking services. As of February 18, 2019, the company had 5,000 branches in India. HDFC Bank Limited was founded in 1994 and is based in Mumbai, India.

Avidbank Company Profile

Avidbank Holdings, Inc. operates as the bank holding company for Avidbank that provides financial products and services to small and middle-market businesses, professionals, and individuals in the San Mateo, San Francisco, and Santa Clara counties. The company offers business and personal deposit products, such as checking account, money market account, saving account, and certificates of deposit. Its personal lending products include secured and unsecured lines of credit, home equity lines of credit, remodel and new home construction loans, and term loans; corporate banking offers working capital lines of credit, equipment loans, acquisition financing, shareholder buyouts, ESOP loans, and owner-occupied real estate loans; and commercial real estate lending offers permanent loans and bridge financing products. The company provides financing solutions, such as technology and asset-based lending, and sponsor finance. The company also offers construction lending products, including land acquisition loans, pre-development loans, construction spec SFD, owner-occupied SFD, condominiums, subdivision, unsecured business lines, real estate bridge loans, and RLOC – real estate secured loans. In addition, it provides various services, such as automated clearing house payments and collections, bill pay, wire transfer, lockbox, merchant, remote deposit capture, ATM/debit cards, credit cards, business courier, cash management, and notary services. Avidbank Holdings, Inc. was founded in 2003 and is headquartered in San Jose, California.

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