PacWest Bancorp (NASDAQ: PACW) and Banco de Chile (NYSE:BCH) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, earnings and analyst recommendations.
This table compares PacWest Bancorp and Banco de Chile’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Banco de Chile||21.51%||18.59%||1.76%|
This is a breakdown of current recommendations and price targets for PacWest Bancorp and Banco de Chile, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Banco de Chile||2||3||1||0||1.83|
PacWest Bancorp presently has a consensus price target of $54.70, indicating a potential upside of 1.71%. Banco de Chile has a consensus price target of $86.33, indicating a potential downside of 18.17%. Given PacWest Bancorp’s stronger consensus rating and higher probable upside, equities research analysts plainly believe PacWest Bancorp is more favorable than Banco de Chile.
Valuation & Earnings
This table compares PacWest Bancorp and Banco de Chile’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PacWest Bancorp||$1.18 billion||5.86||$357.81 million||$2.92||18.42|
|Banco de Chile||$3.84 billion||4.59||$864.01 million||$5.89||17.91|
Banco de Chile has higher revenue and earnings than PacWest Bancorp. Banco de Chile is trading at a lower price-to-earnings ratio than PacWest Bancorp, indicating that it is currently the more affordable of the two stocks.
PacWest Bancorp pays an annual dividend of $2.00 per share and has a dividend yield of 3.7%. Banco de Chile pays an annual dividend of $2.12 per share and has a dividend yield of 2.0%. PacWest Bancorp pays out 68.5% of its earnings in the form of a dividend. Banco de Chile pays out 36.0% 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. PacWest Bancorp has increased its dividend for 6 consecutive years. PacWest Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
PacWest Bancorp has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Banco de Chile has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500.
Insider & Institutional Ownership
84.3% of PacWest Bancorp shares are held by institutional investors. Comparatively, 1.4% of Banco de Chile shares are held by institutional investors. 1.0% of PacWest Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
PacWest Bancorp beats Banco de Chile on 12 of the 18 factors compared between the two stocks.
PacWest Bancorp Company Profile
PacWest Bancorp is a bank holding company for Pacific Western Bank (the Bank). The Company is focused on relationship-based business banking to small, middle-market and venture-backed businesses. As of October 23, 2017, the Bank offered a range of loan and deposit products and services through 83 branches located throughout the state of California, one branch located in Durham, North Carolina, and several loan production offices located in cities across the country. The Company provides commercial banking services, and deposit and treasury management services to small and middle-market businesses. It offers products and services through its CapitalSource and Square 1 Bank divisions. In addition, the Company provides investment advisory and asset management services to select clients through Square 1 Asset Management, Inc., a subsidiary of the Bank.
Banco de Chile Company Profile
Banco de Chile is a full service financial institution, which is engaged in providing credit and non-credit products and services in Chile. The Bank offers a range of banking services to its customers, ranging from individuals to corporations. The Bank’s segments include Retail, which focuses on individuals and small and medium-sized companies, where the product offering focuses on consumer loans, commercial loans, checking accounts, credit cards, credit lines and mortgage loans; Wholesale, which focuses on corporate clients and companies, where the product offering focuses on commercial loans, checking accounts and liquidity management services, debt instruments, foreign trade, derivative contracts and leases; Treasury, which includes the associated revenues to the management of the investment portfolio and the business of financial transactions and currency trading, and Subsidiaries, which corresponds to companies and corporations controlled by the Bank.
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