Comparing Itau Unibanco (NYSE:ITUB) & First Capital (NASDAQ:FCAP)

Itau Unibanco (NYSE:ITUB) and First Capital (NASDAQ:FCAP) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Profitability

This table compares Itau Unibanco and First Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Itau Unibanco	26.41%	21.40%	1.53%
First Capital	26.79%	13.39%	1.45%

Dividends

Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.3%. First Capital pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. Itau Unibanco pays out 3.9% of its earnings in the form of a dividend. First Capital pays out 23.1% 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. First Capital has raised its dividend for 2 consecutive years. First Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Itau Unibanco and First Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Itau Unibanco	0	2	3	0	2.60
First Capital	0	0	2	0	3.00

Itau Unibanco presently has a consensus target price of $9.87, indicating a potential upside of 1.98%. Given Itau Unibanco’s higher possible upside, research analysts plainly believe Itau Unibanco is more favorable than First Capital.

Institutional and Insider Ownership

11.7% of First Capital shares are owned by institutional investors. 0.6% of Itau Unibanco shares are owned by insiders. Comparatively, 4.1% of First Capital shares are owned by 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.

Earnings and Valuation

This table compares Itau Unibanco and First Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itau Unibanco	$30.04 billion	3.57	$8.03 billion	$0.76	12.73
First Capital	$65.31 million	3.24	$16.37 million	$5.53	11.46

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

Risk & Volatility

Itau Unibanco has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, First Capital has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Summary

Itau Unibanco beats First Capital on 9 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 First Capital

First Capital, Inc. operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers. The company offers various deposit instruments, including non-interest-bearing checking accounts, negotiable order of withdrawal accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plans. It also provides residential mortgage loans, construction loans for residential and commercial properties, and commercial real estate loans, as well as commercial business loans. In addition, the company originates mortgage loans for sale in the secondary market and sells non-deposit investment products; and offers various secured or guaranteed consumer loans comprising automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans, credit cards and other personal loans, and loans secured by savings deposits, as well as unsecured consumer loans. First Capital, Inc. was founded in 1891 and is based in Corydon, Indiana.