Banco Bradesco (NYSE:BBD) and Luther Burbank (NASDAQ:LBC) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Valuation and Earnings

This table compares Banco Bradesco and Luther Burbank’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Banco Bradesco $32.99 billion 2.87 $5.22 billion $0.71 13.83
Luther Burbank $230.19 million 2.66 $45.06 million $0.79 13.78

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

Profitability

This table compares Banco Bradesco and Luther Burbank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Banco Bradesco 15.96% 18.75% 1.75%
Luther Burbank 18.64% 7.98% 0.68%

Institutional and Insider Ownership

2.1% of Banco Bradesco shares are held by institutional investors. Comparatively, 22.3% of Luther Burbank shares are held by institutional investors. 20.8% of Luther Burbank shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Banco Bradesco pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. Luther Burbank pays an annual dividend of $0.23 per share and has a dividend yield of 2.1%. Banco Bradesco pays out 5.6% of its earnings in the form of a dividend. Luther Burbank pays out 29.1% 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. Banco Bradesco has raised its dividend for 5 consecutive years.

Risk and Volatility

Banco Bradesco has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Luther Burbank has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Banco Bradesco and Luther Burbank, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Banco Bradesco 3 1 1 0 1.60
Luther Burbank 0 2 1 0 2.33

Banco Bradesco currently has a consensus price target of $9.58, suggesting a potential downside of 2.44%. Luther Burbank has a consensus price target of $11.83, suggesting a potential upside of 8.66%. Given Luther Burbank’s stronger consensus rating and higher possible upside, analysts plainly believe Luther Burbank is more favorable than Banco Bradesco.

Banco Bradesco Company Profile

Banco Bradesco S.A., together with its subsidiaries, provides banking and financial products and services to individuals, corporates, and businesses in Brazil and internationally. It operates through two segments, Banking and Insurance. The company accepts checking and savings accounts, demand deposits, time deposits, and interbank deposits. The company's loan products include direct to consumer loans and leasing facilities to purchase light vehicles, heavy vehicles, and motorcycles; payroll-deducted loans for public pensioners and civil servants; housing loans and working capital loans; and overdrafts and credit cards. It also provides fund management and treasury services, foreign exchange operations, corporate finance, and investment banking services; hedge and finance operations; and insurance products, which include automobile, health, life, accident, and property insurance, as well as pension plans, real estate ventures, and capitalization bonds. In addition, the company offers mutual funds, leasing, asset management and administration, international banking, consortium administration, debit cards, telephone, and Internet banking services. It operates through a network of 4,617 branches, including 1 branch each in New York, Grand Cayman, and London; 76,200 service units; and 58,100 ATMs. Banco Bradesco S.A. was founded in 1943 and is headquartered in Osasco, Brazil.

Luther Burbank Company Profile

Luther Burbank Corporation operates as the bank holding company for Luther Burbank Savings that provides various banking products and services for real estate investors, professionals, entrepreneurs, high net worth individuals, and commercial businesses. The company offers interest and noninterest-bearing transaction accounts, certificates of deposit, and money market accounts. It also provides commercial real estate loans, including first mortgage loans for the purchase, refinance, or build-out of tenant improvements on investor owned multifamily residential properties, as well as loans for the purchase, refinance, or improvement of office, retail, and light industrial properties; single family residential loans; and mortgage products, such as a portfolio of 30-year fixed rate first mortgage and a forgivable second mortgage. In addition, the company offers ATM machines, debit cards, and online and mobile banking services; engages in the real estate investment and equal housing lending activities; and issues trust preferred securities. As of January 28, 2019, it had operations in California, Oregon, and Washington through nine branches in California; 1 branch in Washington; and 9 lending offices located throughout the market area, including Santa Rosa, Los Angeles, San Francisco, San Jose, San Diego, and Seattle. The company was founded in 1983 and is headquartered in Santa Rosa, California.

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