Itau Unibanco (NYSE:ITUB) versus City (NASDAQ:CHCO) Financial Analysis

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

Dividends

City pays an annual dividend of $4.00 per share and has a dividend yield of 2.8%. Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.4%. City pays out 43.8% of its earnings in the form of a dividend. Itau Unibanco pays out 3.9% 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. City has raised its dividend for 6 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings for City and Itau Unibanco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	3	0	1	2.50
Itau Unibanco	0	2	3	0	2.60

City presently has a consensus price target of $140.00, indicating a potential downside of 0.91%. Itau Unibanco has a consensus price target of $9.87, indicating a potential upside of 26.90%. Given Itau Unibanco’s stronger consensus rating and higher probable upside, analysts plainly believe Itau Unibanco is more favorable than City.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
City	32.58%	16.34%	1.95%
Itau Unibanco	26.41%	21.40%	1.53%

Volatility and Risk

City has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, Itau Unibanco has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.

Valuation & Earnings

This table compares City and Itau Unibanco”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$313.12 million	6.34	$130.49 million	$9.14	15.46
Itau Unibanco	$30.04 billion	2.87	$8.03 billion	$0.76	10.23

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

Insider and Institutional Ownership

72.4% of City shares are owned by institutional investors. 1.8% of City shares are owned by company insiders. Comparatively, 0.6% of Itau Unibanco shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

City beats Itau Unibanco on 10 of the 18 factors compared between the two stocks.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

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.