Financial Review: Credicorp (NYSE:BAP) and Bank of Communications (OTCMKTS:BCMXY)

Credicorp (NYSE:BAP) and Bank of Communications (OTCMKTS:BCMXY) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, earnings, risk, valuation, institutional ownership and profitability.

Institutional & Insider Ownership

89.8% of Credicorp shares are owned by institutional investors. 15.9% of Credicorp shares are owned 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.

Valuation and Earnings

This table compares Credicorp and Bank of Communications”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Credicorp	$7.00 billion	2.93	$1.47 billion	$21.10	12.20
Bank of Communications	$75.42 billion	0.84	$13.02 billion	$4.12	5.16

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Credicorp and Bank of Communications, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credicorp	0	4	4	1	2.67
Bank of Communications	0	0	0	0	0.00

Credicorp currently has a consensus price target of $250.00, indicating a potential downside of 2.91%. Given Credicorp’s stronger consensus rating and higher probable upside, research analysts clearly believe Credicorp is more favorable than Bank of Communications.

Profitability

This table compares Credicorp and Bank of Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Credicorp	23.22%	17.94%	2.48%
Bank of Communications	17.84%	8.15%	0.63%

Volatility and Risk

Credicorp has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, Bank of Communications has a beta of -0.16, suggesting that its stock price is 116% less volatile than the S&P 500.

Dividends

Credicorp pays an annual dividend of $11.01 per share and has a dividend yield of 4.3%. Bank of Communications pays an annual dividend of $1.10 per share and has a dividend yield of 5.2%. Credicorp pays out 52.2% of its earnings in the form of a dividend. Bank of Communications pays out 26.7% 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. Credicorp has raised its dividend for 3 consecutive years. Bank of Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Credicorp beats Bank of Communications on 14 of the 18 factors compared between the two stocks.

About Credicorp

Credicorp Ltd. provides various financial, insurance, and health services and products primarily in Peru and internationally. It operates through Universal Banking, Insurance and Pensions, Microfinance, and Investment Banking and Equity Management segments. The Universal Banking segment grants various credits and financial instruments to individuals and legal entities; and various deposits and current accounts. The Insurance and Pensions segment issues insurance policies to cover losses in commercial property, transport, marine vessels, automobiles, life, health, and pensions; and management services for private pension funds. The Microfinance segment provides management of loans, deposits, and current accounts for small and microenterprises. The Investment Banking and Equity Management segment is involved in provision of brokerage and investment management services for corporations, institutional investors, governments, and foundations; structuring and placement of issues in the primary market; execution and negotiation of transactions in the secondary market; and structuring of securitization processes for corporate customers and manages mutual funds. The company was founded in 1889 and is headquartered in Lima, Peru.

About Bank of Communications

Bank of Communications Co., Ltd. provides commercial banking products and services in China. The company offers savings deposit products, including demand deposits, lump-sum deposits and withdrawal, time deposit of small savings for lump-sum withdrawal, interest withdrawal on principal deposited, time-demand deposit, call deposit, swap management, and education deposit; personal certificate of deposit; salary financing A; and foreign currency deposit. It also provides credit, quasi-credit, and debit cards; new housing and second-hand mortgage loans and unsecured personal loans; personal wealth management advisor services; and precious metal and commodity trading services. In addition, the company offers corporate structured deposit and corporate certificate of deposit; corporate cash management; industrial chain finance program comprising prepayment financing, inventory financing, accounts receivable financing and accounts payable financing; syndicated loans; corporation overdraft; investment banking services; and offshore banking services, such as repayment financing, inventory financing, accounts receivable financing and accounts payable financing, and forex currencies. Further, it provides bond account activation, bond distribution, and transaction services; related bond escrow and settlement, pledge registration, and principal and interest payment services; training and consulting services for cooperative banks; cross-border inter-bank payments system services; consignment sales of precious metal products; bond underwriting distribution; third party bond depository services; bank derivatives transfer; b-share transfer; bankfutures transfer; standard warehouse warrant pledged financing; institutional investment consulting, wealth management, and insurance services; and clearing and settlement services for future markets. The company was founded in 1908 and is headquartered in Shanghai, the People’s Republic of China.