National Bank of Canada (OTCMKTS: UOVEY) and United Overseas Bank (OTCMKTS:UOVEY) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Profitability

This table compares National Bank of Canada and United Overseas Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Bank of Canada 20.48% 18.80% 0.87%
United Overseas Bank 32.33% 10.40% 1.07%

Dividends

National Bank of Canada pays an annual dividend of $1.91 per share and has a dividend yield of 3.9%. United Overseas Bank pays an annual dividend of $1.47 per share and has a dividend yield of 3.9%. National Bank of Canada pays out 45.8% of its earnings in the form of a dividend. United Overseas Bank pays out 51.2% 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. National Bank of Canada is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and target prices for National Bank of Canada and United Overseas Bank, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Bank of Canada 0 1 0 0 2.00
United Overseas Bank 0 0 0 0 N/A

Earnings and Valuation

This table compares National Bank of Canada and United Overseas Bank’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Bank of Canada $6.85 billion 2.44 $1.48 billion $4.17 11.83
United Overseas Bank $8.99 billion 3.51 $2.46 billion $2.87 13.24

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

Insider and Institutional Ownership

0.1% of National Bank of Canada shares are owned by institutional investors. Comparatively, 0.4% of United Overseas Bank shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

National Bank of Canada has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, United Overseas Bank has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Summary

United Overseas Bank beats National Bank of Canada on 7 of the 12 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 debt and equity underwriting; bank credit and risk management products and services; advisory services in the areas of mergers and acquisitions, and financing; and investment banking services comprising origination, underwriting, distribution, and liquidity services through secondary market activities, as well as macroeconomic and issuer-focused research services. 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 429 branches and 931 banking machines. The company was founded in 1859 and is headquartered in Montreal, Canada.

About United Overseas Bank

United Overseas Bank Limited provides financial products and services. The company's Group Retail segment provides deposits, insurance, card, wealth management, investment, and loan and trade financing products for personal and small enterprise customers. Its Group Wholesale Banking segment provides financing, trade, cash management, capital markets solutions, and advisory and treasury products and services. The company's Global Markets segment offers foreign exchange, interest rate, credit, commodities, equities, and structured investment products; and manages funds and liquidity. Its Other segment provides investment management, property, and insurance services. The company has a network of approximately 500 offices in 19 countries and territories in the Asia Pacific, Europe, and North America. The company was formerly known as United Chinese Bank and changed its name to United Overseas Bank Limited in 1965. United Overseas Bank Limited was founded in 1935 and is headquartered in Singapore.

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