Financial Survey: Sierra Bancorp (NASDAQ:BSRR) and HDFC Bank (NYSE:HDB)

Sierra Bancorp (NASDAQ:BSRR) and HDFC Bank (NYSE:HDB) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Dividends

Sierra Bancorp pays an annual dividend of $1.08 per share and has a dividend yield of 2.7%. HDFC Bank pays an annual dividend of $0.34 per share and has a dividend yield of 1.5%. Sierra Bancorp pays out 31.6% of its earnings in the form of a dividend. HDFC Bank pays out 20.0% 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. Sierra Bancorp has raised its dividend for 2 consecutive years. Sierra Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Sierra Bancorp and HDFC Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	22.37%	12.38%	1.20%
HDFC Bank	15.96%	11.84%	1.64%

Valuation & Earnings

This table compares Sierra Bancorp and HDFC Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sierra Bancorp	$201.98 million	2.59	$42.33 million	$3.42	11.80
HDFC Bank	$54.16 billion	2.15	$7.51 billion	$1.70	13.33

HDFC Bank has higher revenue and earnings than Sierra Bancorp. Sierra Bancorp is trading at a lower price-to-earnings ratio than HDFC Bank, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and price targets for Sierra Bancorp and HDFC Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	3	2	0	2.40
HDFC Bank	0	3	1	0	2.25

Sierra Bancorp currently has a consensus price target of $38.67, indicating a potential downside of 4.22%. Given Sierra Bancorp’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Sierra Bancorp is more favorable than HDFC Bank.

Volatility and Risk

Sierra Bancorp has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Insider & Institutional Ownership

55.4% of Sierra Bancorp shares are owned by institutional investors. Comparatively, 17.6% of HDFC Bank shares are owned by institutional investors. 11.8% of Sierra Bancorp shares are owned by company insiders. Comparatively, 1.0% of HDFC Bank shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Sierra Bancorp beats HDFC Bank on 12 of the 17 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

About HDFC Bank

HDFC Bank Limited provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in three segments: Wholesale Banking, Retail Banking, and Treasury Services. It accepts savings, salary, current, rural, public provident fund, pension, and demat accounts; fixed and recurring deposits; and safe deposit lockers, as well as offshore accounts and deposits, and overdrafts against fixed deposits. The company also provides personal, home, car, two-wheeler, business, doctor, educational, gold, consumer, and rural loans; loans against properties, securities, fixed deposits, rental receivables, and assets; loans for professionals; government sponsored programs; and loans on credit card, as well as working capital and commercial/construction equipment finance, healthcare/medical equipment and commercial vehicle finance, dealer finance, and term loans. In addition, it offers credit, debit, prepaid, and forex cards; payment and collection, export, import, remittance, bank guarantee, letter of credit, trade, hedging, and merchant and cash management services; insurance and investment products. Further, the company provides short term finance, bill discounting, structured finance, export credit, loan repayment, and documents collection services; online and wholesale, mobile, and phone banking services; unified payment interface, immediate payment, national electronic funds transfer, and real time gross settlement services; and channel financing, vendor financing, reimbursement account, money market, derivatives, employee trusts, cash surplus corporates, tax payment, and bankers to rights/public issue services, as well as financial solutions for supply chain partners and agricultural customers. It operates branches and automated teller machines in various cities/towns. The company was incorporated in 1994 and is headquartered in Mumbai, India.