First Foundation (NASDAQ: FFWM) and HDFC Bank (NYSE:HDB) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of current ratings and price targets for First Foundation and HDFC Bank, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Foundation 0 1 2 0 2.67
HDFC Bank 0 1 2 0 2.67

First Foundation presently has a consensus price target of $19.50, suggesting a potential upside of 2.20%. Given First Foundation’s higher possible upside, analysts clearly believe First Foundation is more favorable than HDFC Bank.

Valuation & Earnings

This table compares First Foundation and HDFC Bank’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Foundation $135.20 million 5.32 $23.30 million $0.92 20.74
HDFC Bank $12.17 billion 6.61 $2.17 billion $2.66 35.41

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

Risk & Volatility

First Foundation has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Dividends

HDFC Bank pays an annual dividend of $0.49 per share and has a dividend yield of 0.5%. First Foundation does not pay a dividend. HDFC Bank pays out 18.4% of its earnings in the form of a dividend. HDFC Bank has raised its dividend for 4 consecutive years.

Institutional and Insider Ownership

51.0% of First Foundation shares are held by institutional investors. Comparatively, 17.5% of HDFC Bank shares are held by institutional investors. 18.5% of First Foundation shares are held by insiders. Comparatively, 1.0% of HDFC Bank shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
First Foundation 19.62% 10.32% 0.82%
HDFC Bank 18.00% 15.22% 1.74%

Summary

HDFC Bank beats First Foundation on 10 of the 15 factors compared between the two stocks.

First Foundation Company Profile

First Foundation Inc. is a financial services holding company that provides a platform of personalized financial services to high net-worth individuals and their families, family businesses and other affiliated organizations. The Company conducts its operations through its subsidiaries, First Foundation Advisors (FFA) and First Foundation Bank (FFB), and First Foundation Insurance Services (FFIS), a subsidiary of FFB. The Company’s segments include Banking, Investment Management and Wealth Planning (Wealth Management), and Other. The Banking segment includes the operations of FFB and FFIS, and Wealth Management segment includes the operations of FFA. The Company’s integrated platform provides investment management, wealth planning, consulting, trust, banking products and services, life insurance services and property and casualty insurance services to meet the financial needs of its clients.

HDFC Bank Company Profile

HDFC Bank Limited (the Bank) is a holding company. The Bank offers a range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side. It also offers financial services. The Bank’s segments include Treasury, Retail banking, Wholesale banking and Other banking business. The Treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money market borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and derivative contracts. The Retail Banking segment serves retail customers through a branch network and other delivery channels, as well as through alternative delivery channels. The Bank provides its corporate and institutional clients a range of commercial and transactional banking products. The Other banking business segment includes income from para banking activities.

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