Critical Survey: Itau Unibanco (NYSE:ITUB) & Shinhan Financial Group (NYSE:SHG)

Itau Unibanco (NYSE:ITUB) and Shinhan Financial Group (NYSE:SHG) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Insider & Institutional Ownership

7.8% of Shinhan Financial Group shares are owned by institutional investors. 0.6% of Itau Unibanco shares are owned by company insiders. Comparatively, 1.0% of Shinhan Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Itau Unibanco and Shinhan Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Itau Unibanco	0	2	3	1	2.83
Shinhan Financial Group	1	0	1	0	2.00

Itau Unibanco currently has a consensus price target of $7.09, suggesting a potential downside of 5.89%. Given Itau Unibanco’s stronger consensus rating and higher possible upside, equities analysts plainly believe Itau Unibanco is more favorable than Shinhan Financial Group.

Valuation and Earnings

This table compares Itau Unibanco and Shinhan Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itau Unibanco	$62.19 billion	1.31	$7.62 billion	$0.72	10.47
Shinhan Financial Group	$24.56 billion	1.07	$3.12 billion	$10.27	5.28

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

Dividends

Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.4%. Shinhan Financial Group pays an annual dividend of $1.20 per share and has a dividend yield of 2.2%. Itau Unibanco pays out 4.2% of its earnings in the form of a dividend. Shinhan Financial Group pays out 11.7% 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.

Profitability

This table compares Itau Unibanco and Shinhan Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Itau Unibanco	16.30%	19.60%	1.49%
Shinhan Financial Group	22.38%	12.45%	0.98%

Volatility & Risk

Itau Unibanco has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Shinhan Financial Group has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Summary

Itau Unibanco beats Shinhan Financial Group on 11 of the 17 factors compared between the two stocks.

About Itau Unibanco

Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It offers current account; loans; credit and debit cards; investment and commercial banking services; real estate lending services; financing and investment services; economic, financial and brokerage advisory; and leasing and foreign exchange services. The company also provides property and casualty insurance products covering loss, damage, or liabilities for assets or persons, as well as life insurance products covering death and personal accident. It serves retail customers, account and non-account holders, individuals and legal entities, high income clients, microenterprises, and small companies, as well as middle-market companies and high net worth clients. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; business expansion financing and consulting services; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers real estate trust, investment advisory, venture business investment, life and non-life insurance, trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. Additionally, it provides transaction history inquiries and fund transfers, opening letters of credit, trade finance, payment and collection management, sales and acquisition settlement, business-to-business settlement, sweeping, pooling, ERP interface, host-to-host banking, SWIFT SCORE, and cash and liquidity management service. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.