Critical Review: China Construction Bank (OTCMKTS:CICHF) and Freddie Mac (OTCMKTS:FMCC)

China Construction Bank (OTCMKTS:CICHF) and Freddie Mac (OTCMKTS:FMCC) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, earnings, analyst recommendations and profitability.

Insider and Institutional Ownership

6.7% of China Construction Bank shares are held by institutional investors. 0.1% of Freddie Mac shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares China Construction Bank and Freddie Mac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
China Construction Bank	N/A	N/A	N/A
Freddie Mac	9.58%	-90.29%	0.37%

Valuation & Earnings

This table compares China Construction Bank and Freddie Mac”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
China Construction Bank	N/A	N/A	N/A	$0.91	1.26
Freddie Mac	$129.82 billion	0.03	$10.73 billion	$0.01	538.00

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for China Construction Bank and Freddie Mac, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
China Construction Bank	0	0	0	0	0.00
Freddie Mac	1	2	2	1	2.50

Freddie Mac has a consensus price target of $14.90, suggesting a potential upside of 176.95%. Given Freddie Mac’s stronger consensus rating and higher probable upside, analysts plainly believe Freddie Mac is more favorable than China Construction Bank.

Summary

Freddie Mac beats China Construction Bank on 9 of the 12 factors compared between the two stocks.

About China Construction Bank

China Construction Bank Corporation provides various banking and related financial services to individuals and corporate customers in the People's Republic of China and internationally. It operates through Corporate Finance Business, Personal Finance Business, Treasury and Asset Management Business, and Others segments. The company accepts various deposits, such as foreign currency, all in one accounts, RMB, corporate term and notification, and corporate demand deposits, as well corporate deposits by agreement. Its loan products include personal business, car, and housing loans; and SME, traditional credit, commercial draft, buyer credit, and RMB credit line loans. The company also offers credit cards; physical gold for personal investment and personal gold accounts; foreign exchange services; certificate treasury and savings bonds, securities deposit accounts, and securities services, as well as bank-securities transfer and book-entry treasury bond over the counter transaction services; and wealth management products. In addition, it provides collection, salaries payment, third-party collection and payment, insurance agency, and remittance services; international settlement and financing, and FI services; securities and fund settlement services; guarantee-based, consulting and advising, and factoring services; fund custody services; and e-banking services. Further, the company offers institutional services comprising services for government agencies, social security, banks cooperation, bank-securities cooperation, bank-insurance cooperation, and services for non-banking financial institutions. China Construction Bank Corporation was founded in 1954 and is headquartered in Beijing, the People's Republic of China.

About Freddie Mac

Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit and market risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, housing finance agencies, savings institutions, and non-depository financial institutions. The Multifamily segment engages in the purchase, securitization, and guarantee of multifamily loans; issuance of multifamily K certificates; manages multifamily mortgage credit and market risk; and invests in multifamily loans and mortgage-related securities. It serves banks and other financial institutions, insurance companies, money managers, hedge funds, pension funds, state and local governments, and broker dealers. Federal Home Loan Mortgage Corporation incorporated in 1970 and is headquartered in McLean, Virginia.