Head-To-Head Comparison: Cullen/Frost Bankers (NYSE:CFR) versus Bank of China (OTCMKTS:BACHY)

Cullen/Frost Bankers (NYSE:CFR) and Bank of China (OTCMKTS:BACHY) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.

Dividends

Cullen/Frost Bankers pays an annual dividend of $4.12 per share and has a dividend yield of 2.6%. Bank of China pays an annual dividend of $0.63 per share and has a dividend yield of 3.3%. Cullen/Frost Bankers pays out 38.9% of its earnings in the form of a dividend. Bank of China pays out 24.1% 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. Cullen/Frost Bankers has raised its dividend for 32 consecutive years. Bank of China is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Cullen/Frost Bankers and Bank of China, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cullen/Frost Bankers	1	7	5	0	2.31
Bank of China	0	1	0	0	2.00

Cullen/Frost Bankers presently has a consensus target price of $169.36, indicating a potential upside of 7.82%. Given Cullen/Frost Bankers’ stronger consensus rating and higher probable upside, research analysts clearly believe Cullen/Frost Bankers is more favorable than Bank of China.

Risk & Volatility

Cullen/Frost Bankers has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Bank of China has a beta of 0.07, meaning that its stock price is 93% less volatile than the S&P 500.

Earnings and Valuation

This table compares Cullen/Frost Bankers and Bank of China”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cullen/Frost Bankers	$2.30 billion	4.25	$648.56 million	$10.58	14.85
Bank of China	$169.73 billion	1.44	$33.81 billion	$2.61	7.27

Bank of China has higher revenue and earnings than Cullen/Frost Bankers. Bank of China is trading at a lower price-to-earnings ratio than Cullen/Frost Bankers, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cullen/Frost Bankers and Bank of China’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cullen/Frost Bankers	23.34%	15.55%	1.29%
Bank of China	20.44%	7.88%	0.68%

Insider & Institutional Ownership

86.9% of Cullen/Frost Bankers shares are held by institutional investors. 1.1% of Cullen/Frost Bankers shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Cullen/Frost Bankers beats Bank of China on 13 of the 17 factors compared between the two stocks.

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. operates as the bank holding company for Frost Bank that provides commercial and consumer banking services in Texas. The company offers commercial banking services to corporations, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; and treasury management services, as well as originates commercial leasing services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, first mortgage loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds transmitting, and foreign exchange services; correspondent banking activities, including check clearing, transfer of funds, fixed income security services, and securities custody and clearance services. Further, it offers trust, investment, agency, and custodial services for individual and corporate clients; capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and support for international business activities, including foreign exchange, letters of credit, export-import financing, and other related activities. Additionally, the company offers insurance and securities brokerage services; holding of securities for investment purposes; and investment management services for mutual funds, institutions, and individuals. It serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. The company was founded in 1868 and is headquartered in San Antonio, Texas.

About Bank of China

Bank of China Limited, together with its subsidiaries, provides various banking and financial services in Chinese Mainland, Hong Kong, Macao, Taiwan, and internationally. It operates through six segments: Corporate Banking, Personal Banking, Treasury Operations, Investment Banking, Insurance, and Other. The Corporate Banking segment provides current accounts, deposits, overdrafts, loans, payments and settlements, trade-related products, and other credit facilities, as well as foreign currency, derivative, and wealth management products for corporate customers, government authorities, and financial institutions. The Personal Banking segment offers savings deposits, personal loans, credit cards and debit cards, payments and settlements, wealth management, and funds and insurance agency services to retail customers. The Treasury Operations segment offers foreign exchange transactions, customer-based interest rate, and foreign exchange derivative transactions, as well as money market transactions, proprietary trading, and asset and liability management. The Investment Banking segment provides debt and equity underwriting and financial advisory, sale and trading of securities, stock brokerage, investment research, asset management services, and private equity investment services. The Insurance segment provides underwriting services for general and life insurance business, and insurance agency services. In addition, the company operates debt-to-equity swaps and other supporting, and aircraft and financial leasing business. The company was founded in 1912 and is headquartered in Beijing, China.