Itau Unibanco (NYSE:ITUB) and Macatawa Bank (NASDAQ:MCBC) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, profitability, risk, analyst recommendations, dividends and institutional ownership.

Profitability

This table compares Itau Unibanco and Macatawa Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Itau Unibanco 15.76% 20.05% 1.81%
Macatawa Bank 33.43% 15.59% 1.59%

Dividends

Itau Unibanco pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. Macatawa Bank pays an annual dividend of $0.32 per share and has a dividend yield of 3.0%. Itau Unibanco pays out 6.0% of its earnings in the form of a dividend. Itau Unibanco has increased its dividend for 3 consecutive years and Macatawa Bank has increased its dividend for 4 consecutive years. Macatawa Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations for Itau Unibanco and Macatawa Bank, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Itau Unibanco 1 4 2 0 2.14
Macatawa Bank 0 0 0 0 N/A

Itau Unibanco currently has a consensus price target of $13.50, indicating a potential upside of 71.97%. Given Itau Unibanco’s higher possible upside, research analysts plainly believe Itau Unibanco is more favorable than Macatawa Bank.

Institutional and Insider Ownership

5.3% of Itau Unibanco shares are owned by institutional investors. Comparatively, 32.7% of Macatawa Bank shares are owned by institutional investors. 8.6% of Macatawa Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Itau Unibanco has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Macatawa Bank has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500.

Valuation & Earnings

This table compares Itau Unibanco and Macatawa Bank’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Itau Unibanco $43.15 billion 1.77 $6.81 billion $0.67 11.72
Macatawa Bank $95.67 million 3.78 $31.98 million N/A N/A

Itau Unibanco has higher revenue and earnings than Macatawa Bank.

Summary

Itau Unibanco beats Macatawa Bank on 8 of the 15 factors compared between the two stocks.

Itau Unibanco Company Profile

Itaú Unibanco Holding S.A. provides a range of financial products and services to individuals and corporate clients in Brazil and internationally. The company operates in three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It accepts demand, savings, and time deposits; and offers payroll, mortgage, personal, vehicle, and corporate loans, as well as very small, small, and middle market loans. The company also provides credits cards; investment and private banking services; property, casualty, and life insurance products; reinsurance products; and private pension plans and premium bonds. In addition, it offers consumer finance credit; and capitalization, leasing, and brokerage services. As of December 31, 2017, the company operated through a network of 4,981 branches and client service branches, as well as 46,965 automated teller machines. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. Itaú Unibanco Holding S.A. was founded in 1945 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.

Macatawa Bank Company Profile

Macatawa Bank Corporation operates as the bank holding company for Macatawa Bank that provides commercial and consumer banking and trust services. The company accepts various deposits, such as checking accounts, savings accounts, time deposits, regular and money market savings accounts, certificates of deposit, and demand deposits. Its loan products include commercial and industrial loans comprising loans to finance operations and equipment; commercial real estate loans, which consist of construction and development, and multi-family and other non-residential real estate loans; retail loans, such as residential mortgage loans; and consumer loans, including automobile loans, home equity lines of credit and installment loans, home improvement loans, deposit account loans, and other loans for household and personal purposes. The company also offers ATM and debit card processing, cash management, and trust and brokerage services. It serves individuals, businesses, associations, churches, nonprofit organizations, financial institutions, and government authorities through 26 branch offices, as well as a lending and operation service facility in Kent County, Ottawa County, and northern Allegan County, Michigan. Macatawa Bank Corporation was founded in 1997 and is headquartered in Holland, Michigan.

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