HSBC (NYSE:HSBC) and BBVA Banco Frances (NYSE:BBAR) Critical Analysis

BBVA Banco Frances (NYSE:BBAR) and HSBC (NYSE:HSBC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Insider & Institutional Ownership

1.5% of HSBC shares are held by institutional investors. 0.0% of HSBC shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility and Risk

BBVA Banco Frances has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500. Comparatively, HSBC has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.

Valuation & Earnings

This table compares BBVA Banco Frances and HSBC”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BBVA Banco Frances	$4.86 billion	0.68	$396.45 million	$1.71	9.51
HSBC	$141.75 billion	1.50	$23.98 billion	$5.45	11.12

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

Analyst Ratings

This is a summary of recent recommendations and price targets for BBVA Banco Frances and HSBC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BBVA Banco Frances	0	1	1	0	2.50
HSBC	0	4	1	1	2.50

BBVA Banco Frances currently has a consensus target price of $22.50, suggesting a potential upside of 38.38%. HSBC has a consensus target price of $63.00, suggesting a potential upside of 3.91%. Given BBVA Banco Frances’ higher probable upside, equities research analysts plainly believe BBVA Banco Frances is more favorable than HSBC.

Profitability

This table compares BBVA Banco Frances and HSBC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BBVA Banco Frances	8.31%	13.53%	2.54%
HSBC	14.55%	12.55%	0.81%

Dividends

BBVA Banco Frances pays an annual dividend of $0.98 per share and has a dividend yield of 6.0%. HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 3.3%. BBVA Banco Frances pays out 57.3% of its earnings in the form of a dividend. HSBC pays out 36.3% 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.

Summary

HSBC beats BBVA Banco Frances on 10 of the 15 factors compared between the two stocks.

About BBVA Banco Frances

Banco BBVA Argentina S.A. provides various banking products and services to individuals and companies in Argentina. The company provides retail banking products and services, such as checking and savings accounts, time deposits, credit cards financing, consumer and pledge loans, mortgages, insurance, and investment products to individuals; and small and medium-sized companies products and services, including financing products, factoring, checking accounts, time deposits, transactional and payroll services, insurance, and investment products to private-sector companies. It also provides corporate and investment banking products and services, such as global transaction services; global markets solutions comprising risk management and securities brokerage; long-term financing products, including project finance and syndicated loans; and corporate finance services comprising mergers and acquisitions, and capital markets advisory services to corporations and multinational companies. The company was formerly known as BBVA Banco Francés S.A. and changed its name to Banco BBVA Argentina S.A. in July 2019. Banco BBVA Argentina S.A. was incorporated in 1886 and is based in Buenos Aires, Argentina.

About HSBC

HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.