Financial Analysis: Danske Bank (OTCMKTS:DNKEY) versus NatWest Group (NYSE:NWG)

NatWest Group (NYSE:NWG) and Danske Bank (OTCMKTS:DNKEY) are both large-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, risk, earnings and institutional ownership.

Dividends

NatWest Group pays an annual dividend of $0.49 per share and has a dividend yield of 2.8%. Danske Bank pays an annual dividend of $0.75 per share and has a dividend yield of 3.1%. NatWest Group pays out 28.5% of its earnings in the form of a dividend. Danske Bank pays out 37.1% 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.

Volatility & Risk

NatWest Group has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500. Comparatively, Danske Bank has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Profitability

This table compares NatWest Group and Danske Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NatWest Group	18.18%	12.77%	0.73%
Danske Bank	40.42%	13.01%	0.61%

Analyst Ratings

This is a breakdown of current ratings for NatWest Group and Danske Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NatWest Group	2	3	2	0	2.00
Danske Bank	0	1	4	0	2.80

Institutional & Insider Ownership

1.3% of NatWest Group shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares NatWest Group and Danske Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NatWest Group	$16.09 billion	4.35	$6.14 billion	$1.72	10.15
Danske Bank	$8.18 billion	5.01	$3.43 billion	$2.02	12.15

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

Summary

Danske Bank beats NatWest Group on 8 of the 14 factors compared between the two stocks.

About NatWest Group

NatWest Group plc, together with its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers in the United Kingdom and internationally. It operates through Retail Banking, Private Banking, and Commercial & Institutional segments. The Retail Banking segment offers a range of banking products and related financial services, such as current accounts, mortgages, personal unsecured lending, and personal deposits, as well as mobile and online banking services. The Private Banking segment provides private banking and wealth management products for high-net-worth individuals and their business interests. The Commercial & Institutional segment offers banking and financial solutions to large corporate organisations, multi-nationals, and financial institutions. The company was formerly known as The Royal Bank of Scotland Group plc and changed its name to NatWest Group plc in July 2020. NatWest Group plc was founded in 1727 and is headquartered in Edinburgh, the United Kingdom.

About Danske Bank

Danske Bank A/S provides various banking products and services to corporate, institutional, and international clients. The company offers insurance and pension products, mortgage finance and real-estate brokerage services, asset management and trading services in fixed income products, foreign exchange services, and equities. It also provides advisory services to personal and private banking customers; and business advisory services, including acquisition, change of ownership, strategic development, or international expansion. In addition, the company offers financing, risk management, investment, and financial advisory services for large corporates and institutions; healthcare solutions; and online and mobile banking services. It has operations in Denmark, Finland, Sweden, Norway, the United Kingdom, and internationally. The company was founded in 1871 and is headquartered in Copenhagen, Denmark.