UBS Group (NYSE: BAC) and Bank of America (NYSE:BAC) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Volatility and Risk

UBS Group has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500. Comparatively, Bank of America has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500.

Institutional and Insider Ownership

31.9% of UBS Group shares are held by institutional investors. Comparatively, 65.1% of Bank of America shares are held by institutional investors. 1.0% of UBS Group shares are held by insiders. Comparatively, 0.1% of Bank of America shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

UBS Group pays an annual dividend of $0.69 per share and has a dividend yield of 4.4%. Bank of America pays an annual dividend of $0.48 per share and has a dividend yield of 1.6%. UBS Group pays out 64.5% of its earnings in the form of a dividend. Bank of America pays out 26.2% 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. Bank of America has raised its dividend for 4 consecutive years.

Valuation and Earnings

This table compares UBS Group and Bank of America’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UBS Group $43.95 billion 1.37 $1.07 billion $1.07 14.64
Bank of America $100.26 billion 3.15 $18.23 billion $1.83 16.86

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

Analyst Recommendations

This is a breakdown of recent ratings for UBS Group and Bank of America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UBS Group 1 1 5 0 2.57
Bank of America 0 7 10 0 2.59

Bank of America has a consensus target price of $32.28, indicating a potential upside of 4.61%. Given Bank of America’s stronger consensus rating and higher possible upside, analysts clearly believe Bank of America is more favorable than UBS Group.

Profitability

This table compares UBS Group and Bank of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UBS Group 4.08% 9.45% 0.53%
Bank of America 20.86% 10.06% 1.07%

Summary

Bank of America beats UBS Group on 14 of the 17 factors compared between the two stocks.

UBS Group Company Profile

UBS Group AG, together with its subsidiaries, provides financial advice and solutions worldwide. It operates through five divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management, and Investment Bank. The Wealth Management division offers advisory and financial services to wealthy private clients. This segment provides banking and lending solutions, wealth planning, investment management solutions, and corporate finance advice. The Wealth Management Americas division offers wealth management solutions designed to address the needs of high and ultra high net worth clients. This division operates the United States and Canadian wealth management businesses; and international business booked in the United States. The Personal & Corporate Banking division provides financial products and services to private, corporate, and institutional clients in Switzerland. The Asset Management division offers investment management products and services comprising equities, asset allocation and currency investment strategies, hedge funds, fixed income products, real estate strategies, and infrastructure and private equity products; multi-manager hedge fund solutions and advisory services; and customized multi-asset solutions and advisory services. The Investment Bank division provides advisory, debt and equity capital market, and financing solutions, as well as risk management services, such as corporate lending and associated hedging for wealth management, personal and corporate banking, and asset management businesses serving the corporate, institutional, and wealth management clients. This division also offers cash, derivatives, and financing; foreign exchange, precious metals, rates, and credit; and securities research services. The company was formerly known as UBS AG and changed its name to UBS Group AG in December 2014. UBS Group AG was founded in 1862 and is headquartered in Zurich, Switzerland.

Bank of America Company Profile

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small- and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates through four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, CDs and IRAs, noninterest- and interest-bearing checking accounts, and investment accounts and products; and credit and debit cards, residential mortgages, and home equity loans, as well as direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. This segment provides its products and services through approximately 4,500 financial centers; 16,000 ATMs; call centers; and digital banking platforms. The GWIM segment offers investment management, brokerage, banking, and trust and retirement products; and wealth management solutions targeted to high net worth and ultra high net worth clients, as well as customized solutions to meet clients' wealth structuring, investment management, and trust and banking needs, including specialty asset management services. The Global Banking segment provides lending products and services, including commercial loans, leases, commitment facilities, trade finance, and real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, and short-term investing options; working capital management solutions; and debt and equity underwriting and distribution, and merger-related and other advisory services. The Global Markets segment offers market-making, financing, securities clearing, settlement, and custody services, as well as risk management, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1874 and is based in Charlotte, North Carolina.

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