Analyzing Shinhan Financial Group (NYSE:SHG) & First Interstate BancSystem (NASDAQ:FIBK)

First Interstate BancSystem (NASDAQ:FIBK) and Shinhan Financial Group (NYSE:SHG) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for First Interstate BancSystem and Shinhan Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Interstate BancSystem	3	4	2	0	1.89
Shinhan Financial Group	0	0	1	1	3.50

First Interstate BancSystem currently has a consensus target price of $37.14, indicating a potential downside of 1.21%. Given First Interstate BancSystem’s higher possible upside, research analysts plainly believe First Interstate BancSystem is more favorable than Shinhan Financial Group.

Dividends

First Interstate BancSystem pays an annual dividend of $1.88 per share and has a dividend yield of 5.0%. Shinhan Financial Group pays an annual dividend of $1.71 per share and has a dividend yield of 2.6%. First Interstate BancSystem pays out 58.6% of its earnings in the form of a dividend. Shinhan Financial Group pays out 23.0% 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.

Profitability

This table compares First Interstate BancSystem and Shinhan Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Interstate BancSystem	29.18%	9.49%	1.20%
Shinhan Financial Group	15.68%	8.81%	0.67%

Insider and Institutional Ownership

88.7% of First Interstate BancSystem shares are held by institutional investors. Comparatively, 7.8% of Shinhan Financial Group shares are held by institutional investors. 8.0% of First Interstate BancSystem shares are held by company insiders. Comparatively, 1.0% of Shinhan Financial Group shares are held by company insiders. 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.

Risk and Volatility

First Interstate BancSystem has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Shinhan Financial Group has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Earnings and Valuation

This table compares First Interstate BancSystem and Shinhan Financial Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Interstate BancSystem	$1.41 billion	2.54	$302.10 million	$3.21	11.71
Shinhan Financial Group	$23.83 billion	1.29	$3.48 billion	$7.44	8.84

Shinhan Financial Group has higher revenue and earnings than First Interstate BancSystem. Shinhan Financial Group is trading at a lower price-to-earnings ratio than First Interstate BancSystem, indicating that it is currently the more affordable of the two stocks.

Summary

First Interstate BancSystem beats Shinhan Financial Group on 10 of the 17 factors compared between the two stocks.

About First Interstate BancSystem

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States. It offers various traditional depository products, including checking, savings, and time deposits; and repurchase agreements primarily for commercial and municipal depositors. The company also offers real estate loans comprising commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans comprising direct personal loans, credit card loans and lines of credit, and indirect loans; variable and fixed rate commercial loans for small and medium-sized manufacturing, wholesale, retail, and service businesses for working capital needs and business expansions; and agricultural loans. In addition, it provides a range of trust, employee benefit, investment management, insurance, agency, and custodial services to individuals, businesses, and nonprofit organizations. Further, the company offers marketing, credit review, loan servicing, credit cards issuance and servicing, mortgage loan sales and servicing, indirect consumer loan purchasing and processing, loan collection services, other operational, and specialized staff support services, as well as online and mobile banking services. The company serves individuals, businesses, municipalities, and other entities in various industries, including agriculture, construction, education, governmental services, healthcare, hospitality, housing, professional services, real estate development, retail, technology, tourism, and wholesale trade. First Interstate BancSystem, Inc. was incorporated in 1971 and is headquartered in Billings, Montana.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; business expansion financing and consulting services; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers real estate trust, investment advisory, venture business investment, life and non-life insurance, trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. Additionally, it provides transaction history inquiries and fund transfers, opening letters of credit, trade finance, payment and collection management, sales and acquisition settlement, business-to-business settlement, sweeping, pooling, ERP interface, host-to-host banking, SWIFT SCORE, and cash and liquidity management service. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.