HSBC (NYSE:HSBC) and KB Financial Group (NYSE:KB) Financial Analysis

KB Financial Group (NYSE:KB) and HSBC (NYSE:HSBC) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, risk, valuation and profitability.

Analyst Recommendations

This is a summary of recent recommendations and price targets for KB Financial Group and HSBC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KB Financial Group	0	1	1	0	2.50
HSBC	0	4	6	1	2.73

HSBC has a consensus price target of $63.00, suggesting a potential downside of 29.52%. Given HSBC’s stronger consensus rating and higher probable upside, analysts plainly believe HSBC is more favorable than KB Financial Group.

Earnings and Valuation

This table compares KB Financial Group and HSBC”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KB Financial Group	$27.12 billion	1.47	$3.44 billion	$10.60	9.86
HSBC	$141.75 billion	2.17	$23.98 billion	$4.75	18.82

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

Institutional and Insider Ownership

11.5% of KB Financial Group shares are held by institutional investors. Comparatively, 1.5% of HSBC shares are held by institutional investors. 69.0% of KB Financial Group shares are held by company insiders. Comparatively, 0.0% of HSBC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

KB Financial Group has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, HSBC has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Profitability

This table compares KB Financial Group and HSBC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KB Financial Group	16.96%	9.79%	0.76%
HSBC	12.85%	12.78%	0.81%

Dividends

KB Financial Group pays an annual dividend of $2.04 per share and has a dividend yield of 2.0%. HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 2.2%. KB Financial Group pays out 19.2% of its earnings in the form of a dividend. HSBC pays out 41.7% 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.

Summary

HSBC beats KB Financial Group on 11 of the 17 factors compared between the two stocks.

About KB Financial Group

KB Financial Group Inc. provides a range of banking and related financial services to consumers and corporations in South Korea, the United States, New Zealand, China, Cambodia, the United Kingdom, Indonesia, and internationally. The company operates through Retail Banking, Corporate Banking, Other Banking Services, Credit Card, Securities, Life Insurance, and Non-Life Insurance segments. It offers loans, deposit products, and other related financial products and services to large, small, medium-sized enterprises, and small office/home office, as well as individuals and households; investment banking, and brokerage and supporting services; life insurance products; non-life insurance products, including fire, maritime, injury, technology, liability, package, title, guarantee, other special type insurances, automobile, long-term nonlife, property damage, injury, driver, savings, illness, nursing, pension, and others; and credit sale, cash service, card loan, and other supporting services. The company also engages in securities and derivatives trading, funding, and other supporting activities. In addition, it offers foreign exchange transaction; financial investment; credit card and installment financing; financial leasing; auto Installment finance; real estate trust management; capital and collective investment; collection of receivables or credit investigation; software advisory, development, and supply; microfinance; investment advisory; claim; management; savings banking; information and communication; e-commerce; and general advisory services. The company was founded in 1963 and is headquartered in Seoul, South Korea.

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.