Critical Analysis: Sumitomo Mitsui Financial Group (SMFG) vs. Westpac (WBK)
Sumitomo Mitsui Financial Group (NYSE: SMFG) and Westpac (NYSE:WBK) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, valuation, profitability, dividends and earnings.
This table compares Sumitomo Mitsui Financial Group and Westpac’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sumitomo Mitsui Financial Group||12.69%||6.76%||0.39%|
Sumitomo Mitsui Financial Group pays an annual dividend of $0.12 per share and has a dividend yield of 1.4%. Westpac pays an annual dividend of $1.40 per share and has a dividend yield of 6.4%. Sumitomo Mitsui Financial Group pays out 11.9% of its earnings in the form of a dividend. Westpac pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Risk and Volatility
Sumitomo Mitsui Financial Group has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, Westpac has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.
Institutional & Insider Ownership
2.6% of Sumitomo Mitsui Financial Group shares are held by institutional investors. Comparatively, 0.6% of Westpac shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Sumitomo Mitsui Financial Group and Westpac’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Sumitomo Mitsui Financial Group||$52.05 billion||1.16||$5.91 billion||$1.01||8.46|
|Westpac||$28.58 billion||2.55||$6.09 billion||$1.75||12.47|
Westpac has lower revenue, but higher earnings than Sumitomo Mitsui Financial Group. Sumitomo Mitsui Financial Group is trading at a lower price-to-earnings ratio than Westpac, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations and price targets for Sumitomo Mitsui Financial Group and Westpac, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sumitomo Mitsui Financial Group||0||0||1||0||3.00|
Sumitomo Mitsui Financial Group Company Profile
Sumitomo Mitsui Financial Group, Inc., together with its subsidiaries, provides various banking and financial services. Its Commercial Banking segment offers deposits; loans, including syndicated loans, commitment lines, structured finance, and nonrecourse loans, as well as settlement, cash management, leasing, factoring, management information systems consulting, collection, and investment banking services for listed and mid-sized companies; and personal bank accounts, ordinary deposits, time deposits, foreign currency deposits, housing loans, investment trusts, pension-type insurance products, and life insurance products for individuals. This segment also provides international banking services, such as loans, deposits, clearing services, trade finance, project finance, loan syndication, and cash management services; and services related to money, foreign exchange, securities, and derivative markets. As of March 31, 2017, it had 440 branch offices in japan; 18 branches, 20 sub-branches, and 4 representative offices internationally; and 54,947 ATMs. The company's Leasing segment offers equipment, operating, leveraged, aircraft, small-ticket, and automotive leasing. Its Securities segment provides financial products, investment consultation, and administration services to individual and corporate customers, as well as debt and equity underwriting, and merger and acquisition advisory services for corporate customers. The company's Consumer Finance segment offers credit cards, and related settlement and financing services; installments, such as shopping credit and automobile loans; collection outsourcing and factoring services; and unsecured loans and loan guarantees to individuals. Sumitomo Mitsui Financial Group, Inc. also provides system development, data processing, management consulting, and economic research services; and system engineering and information services, as well as engages in venture capital business. The company is headquartered in Tokyo, Japan.
Westpac Company Profile
Westpac Banking Corporation provides various banking and financial services in Australia, New Zealand, Asia, the Pacific region, and internationally. It operates through five divisions: Consumer Bank, Business Bank, BT Financial Group, Westpac Institutional Bank, and Westpac New Zealand. It offers everyday banking, savings, term deposit, moving to Australia, under 21 and student, business, community solutions one, not-for-profit savings, and foreign currency accounts; term, tailor-made, and farm management deposits; debit, credit, and travel money cards; home, personal, investment, small business, and commercial loans; and equipment, automotive, cash flow, property, and insurance premium financing services. It also provides home and content, landlord, car, travel, boat, caravan and trailer, life, credit card and loan repayment, income protection, business, farm pack, person income, and business overheads insurance products; superannuation and retirement products; investment portfolios; installment warrants; and trading, financial advisory, wealth, foreign currency exchange, international payment, cash flow management, international trade, and import and export services. In addition, it offers industry specific banking and treasury services; other services, such as emergency cash, online and telephone banking, ATMs, unclaimed money, travel center, margin lending, and banking services to migrants moving to Australia; and mobile wallets. Further, it provides capital advisory and fund management, transactional and private banking, and financial market services; and corporate and structured finance, as well as trade and supply chain finance. It serves individuals; micro, small, and medium enterprises; and commercial, corporate, institutional, and government customers. The company was formerly known as Bank of New South Wales and changed its name to Westpac Banking Corporation in October 1982. The company was founded in 1817 and is headquartered in Sydney, Australia.
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