National Bank of Canada (OTCMKTS:NTIOF) and Banco de Chile (NYSE:BCH) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.

Insider and Institutional Ownership

0.0% of National Bank of Canada shares are held by institutional investors. Comparatively, 1.1% of Banco de Chile shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares National Bank of Canada and Banco de Chile’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Bank of Canada $9.04 billion 2.06 $1.70 billion N/A N/A
Banco de Chile $3.61 billion 2.78 $870.29 million $1.70 11.71

National Bank of Canada has higher revenue and earnings than Banco de Chile.

Risk & Volatility

National Bank of Canada has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, Banco de Chile has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.

Dividends

National Bank of Canada pays an annual dividend of $2.14 per share and has a dividend yield of 3.9%. Banco de Chile pays an annual dividend of $0.79 per share and has a dividend yield of 4.0%. Banco de Chile pays out 46.5% of its earnings in the form of a dividend. Banco de Chile has increased its dividend for 8 consecutive years. Banco de Chile is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares National Bank of Canada and Banco de Chile’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Bank of Canada 18.78% 18.31% 0.83%
Banco de Chile 23.97% 17.37% 1.61%

Analyst Ratings

This is a summary of current ratings and price targets for National Bank of Canada and Banco de Chile, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Bank of Canada 1 2 1 0 2.00
Banco de Chile 0 1 1 0 2.50

National Bank of Canada currently has a consensus price target of $68.50, suggesting a potential upside of 23.31%. Banco de Chile has a consensus price target of $29.00, suggesting a potential upside of 45.73%. Given Banco de Chile’s stronger consensus rating and higher probable upside, analysts plainly believe Banco de Chile is more favorable than National Bank of Canada.

Summary

Banco de Chile beats National Bank of Canada on 8 of the 14 factors compared between the two stocks.

About National Bank of Canada

National Bank of Canada provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally. It operates through Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International segments. The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, savings options, and tailored investment solutions; various insurance products; and commercial banking services, such as credit, and deposit and investment solutions, as well as international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complementary services. The Wealth Management segment provides investment solutions, trust services, banking services, lending services, and other wealth management solutions through internal and third-party distribution networks. The Financial Markets segment offers risk management products and services; and debt and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing. The U.S. Specialty Finance and International segments provides specialty finance expertise; financial products and services to individuals and businesses in Cambodia; and the activities of targeted investments in certain emerging markets. The company provides its services through a network of 428 branches and 937 banking machines. The company was founded in 1859 and is headquartered in Montreal, Canada.

About Banco de Chile

Banco de Chile, together with its subsidiaries, provides banking and financial products and services to customers in Chile. The company operates through four segments: Retail, Wholesale, Treasury and Money Market Operations, and Subsidiaries. It offers deposit products, such as checking accounts, current accounts, demand deposits, demand accounts, saving accounts, and time deposits; credit cards; installment loans; credit lines; and residential mortgage loans, as well as short and long term financing. The company also provides commercial loans, such as factoring and leasing; trade finance services; liquidity management services, debt instruments, foreign trade, and derivative contracts; capital market services; cash management and non-lending services that include payroll, payment, and collection services, as well as treasury, financial advisory, and risk management products. In addition, it offers financial services, such as securities brokerage, mutual funds management, investment banking, insurance brokerage, and securitization services. The company serves customers in individuals; small and medium enterprises; and wholesale customers. As of December 31, 2017, it operated through 399 branches comprising 253 branches under the Banco de Chile brand name, 41 branches under the Banco Edwards Citi brand name, and 105 branches under the Banco CrediChile brand name, as well as 1,464 automatic teller machines. Banco de Chile was founded in 1855 and is headquartered in Santiago, Chile.

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