Analyzing Banco Bradesco (BBD) & Fifth Third Bank (FITB)

Banco Bradesco (NYSE: BBD) and Fifth Third Bank (NASDAQ:FITB) are both large-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Profitability

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This table compares Banco Bradesco and Fifth Third Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Banco Bradesco 9.87% 17.44% 1.58%
Fifth Third Bank 27.08% 9.65% 1.03%

Valuation and Earnings

This table compares Banco Bradesco and Fifth Third Bank’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Banco Bradesco $46.46 billion 1.65 $4.59 billion $0.76 15.13
Fifth Third Bank $7.71 billion 2.99 $2.19 billion $2.85 11.79

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

Insider & Institutional Ownership

2.9% of Banco Bradesco shares are held by institutional investors. Comparatively, 84.6% of Fifth Third Bank shares are held by institutional investors. 0.4% of Fifth Third Bank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Banco Bradesco and Fifth Third Bank, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Banco Bradesco 0 1 3 0 2.75
Fifth Third Bank 2 15 3 0 2.05

Banco Bradesco presently has a consensus target price of $12.40, indicating a potential upside of 8.11%. Fifth Third Bank has a consensus target price of $30.78, indicating a potential downside of 8.43%. Given Banco Bradesco’s stronger consensus rating and higher possible upside, research analysts clearly believe Banco Bradesco is more favorable than Fifth Third Bank.

Volatility & Risk

Banco Bradesco has a beta of 1.87, indicating that its share price is 87% more volatile than the S&P 500. Comparatively, Fifth Third Bank has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500.

Dividends

Banco Bradesco pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Fifth Third Bank pays an annual dividend of $0.64 per share and has a dividend yield of 1.9%. Banco Bradesco pays out 7.9% of its earnings in the form of a dividend. Fifth Third Bank pays out 22.5% 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. Fifth Third Bank has increased its dividend for 4 consecutive years. Fifth Third Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Banco Bradesco beats Fifth Third Bank on 9 of the 16 factors compared between the two stocks.

Banco Bradesco Company Profile

Banco Bradesco S.A. is a commercial bank. The Bank offers a range of banking and financial products and services in Brazil and abroad to individuals, large, mid-sized and small companies, and local and international corporations and institutions. Its segments include Financial; Insurance and Capitalization bonds; Pension plans, and Other Activities. The Financial segment consists of financial institutions and holding companies, which are responsible for managing financial resources, and credit card, consortium and asset management companies. The Insurance Group segment comprises insurance, pension plan and capitalization bond companies. It offers banking services, including deposit-taking activities, individual and corporate banking services, credit and debit cards, leasing operations, investment banking, asset management, consortium services and others. Its insurance services include health insurance, life and personal accident insurance, automobile, casualty and pension plans.

Fifth Third Bank Company Profile

Fifth Third Bancorp is a bank holding company and a financial holding company. The Company conducts its principal lending, deposit gathering, transaction processing and service advisory activities through its banking and non-banking subsidiaries from banking centers located throughout the Midwestern and Southeastern regions of the United States. It operates through four segments: Commercial Banking, Branch Banking, Consumer Lending, and Wealth and Asset Management. It diversifies its loan and lease portfolio by offering a range of loan and lease products with various payment terms and rate structures. It offers commercial and industrial loans, commercial mortgage loans, commercial construction loans, commercial leases, residential mortgage loans, home equity, automobile loans, credit card, and other consumer loans and leases. It offers various types of deposits, such as demand deposits, interest checking deposits, savings deposits, money market deposits and transaction deposits.

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