Critical Review: Banco Bradesco (NYSE:BBDO) versus Midland States Bancorp (NASDAQ:MSBI)

Midland States Bancorp (NASDAQ:MSBI) and Banco Bradesco (NYSE:BBDO) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Midland States Bancorp and Banco Bradesco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Midland States Bancorp	9.40%	13.32%	0.92%
Banco Bradesco	10.20%	14.61%	1.11%

Analyst Ratings

This is a summary of recent ratings and price targets for Midland States Bancorp and Banco Bradesco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Midland States Bancorp	0	5	0	1	2.33
Banco Bradesco	0	1	0	0	2.00

Midland States Bancorp presently has a consensus price target of $29.10, suggesting a potential downside of 11.52%. Given Midland States Bancorp’s stronger consensus rating and higher probable upside, research analysts plainly believe Midland States Bancorp is more favorable than Banco Bradesco.

Volatility & Risk

Midland States Bancorp has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Banco Bradesco has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Insider & Institutional Ownership

60.9% of Midland States Bancorp shares are owned by institutional investors. 8.6% of Midland States Bancorp shares are owned by company insiders. Comparatively, 0.3% of Banco Bradesco shares are owned by company 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 Midland States Bancorp and Banco Bradesco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Midland States Bancorp	$476.05 million	1.43	-$124.28 million	$1.56	21.08
Banco Bradesco	$41.79 billion	0.79	$4.24 billion	$0.42	7.44

Banco Bradesco has higher revenue and earnings than Midland States Bancorp. Banco Bradesco is trading at a lower price-to-earnings ratio than Midland States Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

Midland States Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 4.0%. Banco Bradesco pays an annual dividend of $0.03 per share and has a dividend yield of 1.0%. Midland States Bancorp pays out 84.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Banco Bradesco pays out 7.1% of its earnings in the form of a dividend. Midland States Bancorp has raised its dividend for 1 consecutive years. Midland States Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Midland States Bancorp beats Banco Bradesco on 11 of the 17 factors compared between the two stocks.

About Midland States Bancorp

Midland States Bancorp, Inc. operates as a financial holding company for Midland States Bank that provides various banking products and services to individuals, businesses, municipalities, and other entities. It operates through Banking, Wealth Management, and Other segments. The company provides a range of financial products and services to consumers and businesses, including commercial loans to finance agricultural equipment and production; and commercial real estate loans for owner occupied offices, warehouses and production facilities, office buildings, hotels, mixed-use residential and commercial facilities, retail centers, multifamily properties, and assisted living facilities. In addition, it offers construction and land development loans, such as real estate investment properties and residential developments, and lesser extent loans; and residential real estate loans, which includes first and second mortgage loans, and home equity lines of credit consisting of loans secured by first or second mortgages on primarily owner occupied primary residences. The company also provides consumer installment loans for the purchase of cars, boats and other recreational vehicles, as well as for the purchase of major appliances and other home improvement projects; and commercial equipment leasing programs for manufacturing, construction, transportation, and healthcare industries. Further, it offers merchant services; deposit products, including checking, time, savings, money market, and certificates of deposit, as well as sweep accounts; letters of credit; and trust and wealth management services, such as financial and estate planning, trustee and custodial, investment management, tax, insurance, and business planning, corporate retirement plan consulting and administration, and retail brokerage services. The company was founded in 1881 and is headquartered in Effingham, Illinois.

About Banco Bradesco

Banco Bradesco S.A., together with its subsidiaries, provides various banking products and services to individuals, corporates, and businesses in Brazil and internationally. The company operates through two segments, Banking and Insurance. It provides current, savings, click, and salary accounts; real estate credit, vehicle financing, payroll loans, mortgage loans, microcredit, leasing, and personal and installment credit; overdraft and agribusiness loans; debit and business cards; financial and security services; consortium products; car, personal accident, dental, travel, and life insurance; investment products; pension products; foreign currency exchange services; capitalization bonds; and internet banking services. Banco Bradesco S.A. was founded in 1943 and is headquartered in Osasco, Brazil.