GRUPO AVAL ACCI/S (NYSE:AVAL) and HDFC Bank (NYSE:HDB) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares GRUPO AVAL ACCI/S and HDFC Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GRUPO AVAL ACCI/S 9.22% 8.56% 0.92%
HDFC Bank 18.32% 15.01% 1.55%

Dividends

GRUPO AVAL ACCI/S pays an annual dividend of $0.30 per share and has a dividend yield of 4.5%. HDFC Bank pays an annual dividend of $0.55 per share and has a dividend yield of 0.6%. GRUPO AVAL ACCI/S pays out 50.0% of its earnings in the form of a dividend. HDFC Bank pays out 17.7% 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. HDFC Bank has increased its dividend for 5 consecutive years.

Insider & Institutional Ownership

17.9% of GRUPO AVAL ACCI/S shares are owned by institutional investors. Comparatively, 17.7% of HDFC Bank shares are owned by institutional investors. 1.0% of HDFC Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares GRUPO AVAL ACCI/S and HDFC Bank’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GRUPO AVAL ACCI/S $7.02 billion 0.34 $657.60 million $0.60 11.18
HDFC Bank $14.81 billion 5.60 $2.74 billion $3.11 30.94

HDFC Bank has higher revenue and earnings than GRUPO AVAL ACCI/S. GRUPO AVAL ACCI/S is trading at a lower price-to-earnings ratio than HDFC Bank, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

GRUPO AVAL ACCI/S has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for GRUPO AVAL ACCI/S and HDFC Bank, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GRUPO AVAL ACCI/S 0 2 1 0 2.33
HDFC Bank 0 0 0 0 N/A

GRUPO AVAL ACCI/S presently has a consensus target price of $9.00, suggesting a potential upside of 34.13%. Given GRUPO AVAL ACCI/S’s higher probable upside, analysts plainly believe GRUPO AVAL ACCI/S is more favorable than HDFC Bank.

Summary

HDFC Bank beats GRUPO AVAL ACCI/S on 12 of the 16 factors compared between the two stocks.

GRUPO AVAL ACCI/S Company Profile

Grupo Aval Acciones y Valores S.A. provides a range of financial services and products to public and private sector customers in Colombia and Central America. The company's deposit products and services include checking accounts, savings accounts, and time deposits, as well as other deposits consisting of deposits from correspondent accounts, cashier checks, and collection services. It also provides loan products, such as commercial loans that comprise general purpose loans, working capital loans, loans funded by development banks, corporate credit cards, and overdraft loans; consumer loans comprising personal loans, automobile and other vehicle loans, credit cards, overdrafts, loans funded by development banks, and general purpose loans; microcredit loans; and mortgage loans. In addition, the company offers pension and severance fund management services; and trust, bonded warehousing and brokerage transactions, real estate escrow, merchandise and document storage and deposit, customs agency, cargo management, surety bond and merchandise distribution, bancassurance, and payment and collection services, as well as engages in deposit and lending operations in foreign currencies. Further, it is involved in merchant and investment banking activities; trading activities that include fixed income trading, and derivatives and foreign exchange operations, as well as the provision of treasury, pension plan administration, investment fund advice, financial advisory, leasing, private banking, and insurance services. As of December 31, 2017, the company operated through a network of 1,421 branches and 3,781 ATMs in Colombia; and 350 branches and 1,993 ATMs in Central America. Grupo Aval Acciones y Valores S.A. was founded in 1994 and is based in Bogotá, Colombia.

HDFC Bank Company Profile

HDFC Bank Limited provides a range of banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in Treasury, Retail Banking, Wholesale Banking, and Other Banking Business segments. It accepts savings accounts, salary accounts, current accounts, fixed and recurring deposits, demat accounts, safe deposit lockers, and rural accounts, as well as offshore accounts and deposits. The company also offers personal, business, home, consumer durable, car, two wheeler, gold, educational, rural, and term loans; loans for professionals; loans against property, securities, and assets; overdrafts; government sponsored programs; and working capital, healthcare, channel, short term, structured, dealer, and vendor finance, as well as agricultural lending. In addition, it provides credit, debit, and prepaid cards; private banking services; export, import, remittance, bank guarantees, and letter of credit services, as well as merchant and cash management services; life, health, motor, travel, and home insurance products; and investment products, such as mutual funds, equities and derivatives, IPOs, and bonds. Further, the company offers bill discounting, real time gross settlement, bankers to right/public issue, forex, money market, employees trusts, and tax collection services; and investment banking services in the areas of project appraisal, structured finance, loan syndication, debt capital markets, equity placement, mergers and acquisitions, corporate advisory, and capital market advisory services. Additionally, it provides correspondent banking, settlement, custodial, disbursement, clearing, and administrative and fiduciary support services, as well as online and mobile banking services. As of March 31, 2018, the company operated a network of 4,787 branches and 12,635 ATMs in 2,691 cities/towns. HDFC Bank Limited was founded in 1994 and is based in Mumbai, India.

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