Critical Review: RHB Capital Bhd. (OTCMKTS:RHBAF) & KeyCorp (NYSE:KEY)

RHB Capital Bhd. (OTCMKTS:RHBAF) and KeyCorp (NYSE:KEY) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Dividends

RHB Capital Bhd. pays an annual dividend of $0.16 per share and has a dividend yield of 13.4%. KeyCorp pays an annual dividend of $0.82 per share and has a dividend yield of 3.6%. RHB Capital Bhd. pays out 20.2% of its earnings in the form of a dividend. KeyCorp pays out 47.7% 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. RHB Capital Bhd. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares RHB Capital Bhd. and KeyCorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RHB Capital Bhd.	N/A	N/A	N/A	$0.81	1.51
KeyCorp	$7.60 billion	3.19	$1.83 billion	$1.72	13.21

KeyCorp has higher revenue and earnings than RHB Capital Bhd.. RHB Capital Bhd. is trading at a lower price-to-earnings ratio than KeyCorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares RHB Capital Bhd. and KeyCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RHB Capital Bhd.	N/A	N/A	N/A
KeyCorp	17.83%	11.23%	1.05%

Institutional & Insider Ownership

4.4% of RHB Capital Bhd. shares are held by institutional investors. Comparatively, 79.7% of KeyCorp shares are held by institutional investors. 0.6% of KeyCorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for RHB Capital Bhd. and KeyCorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RHB Capital Bhd.	0	0	0	0	0.00
KeyCorp	0	7	12	1	2.70

KeyCorp has a consensus price target of $49.14, suggesting a potential upside of 116.28%. Given KeyCorp’s stronger consensus rating and higher probable upside, analysts clearly believe KeyCorp is more favorable than RHB Capital Bhd..

Summary

KeyCorp beats RHB Capital Bhd. on 12 of the 14 factors compared between the two stocks.

About RHB Capital Bhd.

RHB Capital is the ultimate holding company for the RHB Banking Group of companies. It has been listed on the Main Market of Bursa Malaysia Securities Berhad since 29 December 1994. The Group is involved in commercial banking, Islamic banking, investment banking, stock broking, leasing, offshore banking, offshore trust services, general insurance, unit trust management, asset management/nominee and custodian services.

About KeyCorp

KeyCorp operates as the holding company for KeyBank National Association that provides various retail and commercial banking products and services in the United States. It operates in two segments, Consumer Bank and Commercial Bank. The company offers various deposits, investment products and services; commercial leasing, investment management, consumer finance; and personal finance and financial wellness, student loan refinancing, mortgage and home equity, lending, credit card, treasury, business advisory, wealth management, asset management, cash management, portfolio management, and trust and related services to individuals and small and medium-sized businesses. It also provides a suite of banking and capital market products, such as syndicated finance, debt and equity capital market products, commercial payments, equipment finance, commercial mortgage banking, derivatives, foreign exchange, financial advisory, and public finance, as well as commercial mortgage loans to consumer, energy, healthcare, industrial, public sector, real estate, and technology sectors for middle market clients. In addition, the company offers community development financing, securities underwriting, brokerage, and investment banking services. The company was founded in 1849 and is headquartered in Cleveland, Ohio.