HSBC (NYSE:HSBC – Get Free Report) and NU (NYSE:NU – Get Free Report) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.
Volatility & Risk
HSBC has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500. Comparatively, NU has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.
Institutional & Insider Ownership
1.5% of HSBC shares are owned by institutional investors. Comparatively, 84.0% of NU shares are owned by institutional investors. 0.0% of HSBC shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| HSBC | 1 | 8 | 3 | 0 | 2.17 |
| NU | 1 | 4 | 9 | 0 | 2.57 |
NU has a consensus target price of $17.91, suggesting a potential upside of 16.76%. Given NU’s stronger consensus rating and higher possible upside, analysts plainly believe NU is more favorable than HSBC.
Profitability
This table compares HSBC and NU’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| HSBC | 18.19% | 13.80% | 0.83% |
| NU | 18.65% | 31.59% | 4.97% |
Earnings & Valuation
This table compares HSBC and NU”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| HSBC | $131.35 billion | 2.80 | $22.29 billion | $7.05 | 15.20 |
| NU | $15.77 billion | 4.72 | $2.87 billion | $0.74 | 20.73 |
HSBC has higher revenue and earnings than NU. HSBC is trading at a lower price-to-earnings ratio than NU, indicating that it is currently the more affordable of the two stocks.
Summary
NU beats HSBC on 10 of the 14 factors compared between the two stocks.
About HSBC
HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.
About NU
Nu Holdings Ltd. is a holding company, which engages in the provision of digital banking services. The company was founded by David Vélez Osorno, Cristina Helena Zingaretti Junqueira, and Adam Edward Wible on February 26, 2016 and is headquartered in George Town, Cayman Islands.
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