Analyzing International Bancshares (NASDAQ:IBOC) & Northern Trust (NASDAQ:NTRS)

International Bancshares (NASDAQ:IBOC) and Northern Trust (NASDAQ:NTRS) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations for International Bancshares and Northern Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Bancshares	0	0	0	0	N/A
Northern Trust	2	5	3	0	2.10

Northern Trust has a consensus target price of $84.92, indicating a potential upside of 1.93%. Given Northern Trust’s higher probable upside, analysts plainly believe Northern Trust is more favorable than International Bancshares.

Valuation and Earnings

This table compares International Bancshares and Northern Trust’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Bancshares	$970.10 million	3.71	$411.77 million	$6.55	8.84
Northern Trust	$12.12 billion	1.41	$1.11 billion	$4.53	18.39

Northern Trust has higher revenue and earnings than International Bancshares. International Bancshares is trading at a lower price-to-earnings ratio than Northern Trust, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares International Bancshares and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Bancshares	40.92%	17.50%	2.71%
Northern Trust	7.59%	12.57%	0.91%

Institutional & Insider Ownership

65.9% of International Bancshares shares are held by institutional investors. Comparatively, 83.2% of Northern Trust shares are held by institutional investors. 13.9% of International Bancshares shares are held by company insiders. Comparatively, 0.6% of Northern Trust shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

International Bancshares pays an annual dividend of $1.32 per share and has a dividend yield of 2.3%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 3.6%. International Bancshares pays out 20.2% of its earnings in the form of a dividend. Northern Trust pays out 66.2% 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. International Bancshares has raised its dividend for 15 consecutive years and Northern Trust has raised its dividend for 2 consecutive years.

Risk and Volatility

International Bancshares has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.

About International Bancshares

International Bancshares Corporation, a financial holding company, provides commercial and retail banking services in Texas and the State of Oklahoma. It accepts checking and saving deposits; and offers commercial, real estate, personal, home improvement, automobile, and other installment and term loans. The company also provides international banking services, including letters of credit, commercial and industrial loans, and foreign exchange services. In addition, it offers other banking related services, such as credit cards, safety deposit boxes, collection, notary public, escrow, drive up and walk up facilities, and other customary banking services; and Internet banking services, as well as securities products through third party providers. The company was founded in 1966 and is headquartered in Laredo, Texas.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.