China Merchants Bank (OTCMKTS:CIHKY) vs. Western New England Bancorp (NASDAQ:WNEB) Financial Analysis

China Merchants Bank (OTCMKTS:CIHKY) and Western New England Bancorp (NASDAQ:WNEB) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, profitability, risk and earnings.

Insider & Institutional Ownership

68.0% of Western New England Bancorp shares are held by institutional investors. 6.6% of Western New England Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

China Merchants Bank pays an annual dividend of $0.57 per share and has a dividend yield of 1.9%. Western New England Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 2.1%. China Merchants Bank pays out 14.1% of its earnings in the form of a dividend. Western New England Bancorp pays out 31.5% 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.

Risk and Volatility

China Merchants Bank has a beta of 0.2, suggesting that its share price is 80% less volatile than the S&P 500. Comparatively, Western New England Bancorp has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for China Merchants Bank and Western New England Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
China Merchants Bank	0	1	0	0	2.00
Western New England Bancorp	0	2	2	0	2.50

Western New England Bancorp has a consensus price target of $15.00, suggesting a potential upside of 11.28%. Given Western New England Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Western New England Bancorp is more favorable than China Merchants Bank.

Profitability

This table compares China Merchants Bank and Western New England Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
China Merchants Bank	32.40%	12.14%	1.21%
Western New England Bancorp	13.27%	7.25%	0.65%

Earnings and Valuation

This table compares China Merchants Bank and Western New England Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
China Merchants Bank	$65.04 billion	2.29	$20.89 billion	$4.03	7.32
Western New England Bancorp	$131.13 million	2.07	$15.27 million	$0.89	15.15

China Merchants Bank has higher revenue and earnings than Western New England Bancorp. China Merchants Bank is trading at a lower price-to-earnings ratio than Western New England Bancorp, indicating that it is currently the more affordable of the two stocks.

About China Merchants Bank

China Merchants Bank Co., Ltd., together with its subsidiaries, provides various banking products and services. It operates through Wholesale Finance Business, Retail Finance Business, and Other Business segments. The company offers current, demand, time, call, savings, notice, and renminbi accounts. Its loan products include personal commercial real estate, consumption, housing, and car loans; loans to finance for studying abroad; micro-business loans; mortgage loans for equipment; joint guarantee, special guarantee, and housing mortgage loan; bank acceptance, discount, liquid capital, and fixed asset loans; and loans for vessels. The company also offers credit cards; insurance products; open-ended funds; discount and guarantees for commercial bills, redemption of commercial bills, and guaranteed discount for commercial acceptance bills; and financial consultation, debt financing underwriting, merger and acquisition financing, and equity financing and enterprise listing services. In addition, it provides forfeiting and risk participation, escrow, cross-border RMB clearing, and interbank services; and risk and financial management, cross-border RMB and oversea financing, international factoring and settlement, and trade finance services. Further, the company offers financial leasing and guarantee, investment and wealth management, forex option and gold trading, forex express trading, international, offshore and private banking, custody, pension, and electronic banking services. The company also operates in Hong Kong, New York, London, Singapore, Luxembourg, Sydney, and Taipei. China Merchants Bank Co., Ltd. was founded in 1987 and is headquartered in Shenzhen, China.

About Western New England Bancorp

Western New England Bancorp, Inc. operates as the holding company for Westfield Bank that provides a range of commercial and retail banking products and services to individuals and businesses. The company accepts various deposit accounts, including interest-bearing and noninterest-bearing checking, commercial checking, business, nonprofit and municipal checking, savings, money market and sweep, individual retirement, and other savings accounts; time deposits; certificates of deposit; and interest on lawyer's trust accounts. It also offers residential real estate loans, including first mortgages, home equity loans, and home equity lines, and secured by one-to-four family residential properties; commercial and industrial loans, such as letters of credit, revolving lines of credit, working capital, equipment financing, and term loans; commercial mortgage loans; construction and land development loans; home equity loans comprising home equity revolving loans and lines of credit; and consumer loans, including automobile, spa and pool, collateral, and personal lines of credit. In addition, the company provides automated teller machine (ATM), telephone and online banking, remote deposit capture, cash management, overdraft and safe deposit facility, and night deposit services. The company was formerly known as Westfield Financial, Inc. and changed its name to Western New England Bancorp, Inc. in October 2016. The company was founded in 1853 and is headquartered in Westfield, Massachusetts.