Bancolombia (NYSE: BAP) and Credicorp (NYSE:BAP) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Risk & Volatility

Bancolombia has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, Credicorp has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Earnings and Valuation

This table compares Bancolombia and Credicorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bancolombia $5.76 billion 1.78 $784.50 million $3.64 11.68
Credicorp $4.83 billion 3.50 $1.25 billion $15.74 13.46

Credicorp has lower revenue, but higher earnings than Bancolombia. Bancolombia is trading at a lower price-to-earnings ratio than Credicorp, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for Bancolombia and Credicorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bancolombia 0 7 0 0 2.00
Credicorp 0 2 3 0 2.60

Bancolombia currently has a consensus target price of $43.00, suggesting a potential upside of 1.18%. Credicorp has a consensus target price of $253.00, suggesting a potential upside of 19.46%. Given Credicorp’s stronger consensus rating and higher possible upside, analysts clearly believe Credicorp is more favorable than Bancolombia.

Profitability

This table compares Bancolombia and Credicorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bancolombia 10.59% 8.67% 1.01%
Credicorp 26.62% 19.58% 2.58%

Insider and Institutional Ownership

11.0% of Bancolombia shares are owned by institutional investors. Comparatively, 66.7% of Credicorp shares are owned by institutional investors. 15.9% of Credicorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Bancolombia pays an annual dividend of $1.40 per share and has a dividend yield of 3.3%. Credicorp pays an annual dividend of $4.39 per share and has a dividend yield of 2.1%. Bancolombia pays out 38.5% of its earnings in the form of a dividend. Credicorp pays out 27.9% 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. Credicorp has raised its dividend for 3 consecutive years.

Summary

Credicorp beats Bancolombia on 15 of the 17 factors compared between the two stocks.

About Bancolombia

Bancolombia S.A. provides various banking products and services to individual, corporate, and government customers in Colombia, Latin America, and the Caribbean region. The company operates in nine segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment Banking, Brokerage, Off Shore, and All Other. It offers checking and savings accounts, fixed term deposits, and investment products; trade financing, loans funded by domestic development banks, working capital loans, credit cards, personal and vehicle loans, payroll loans, overdrafts, and financing for industrial projects; mortgage banking and factoring services; and financial and operating leasing services. The company also provides capital market products, including futures, forwards, options, and swaps; and brokerage, investment advisory, and private banking services, including selling and distributing equities, futures, foreign currencies, fixed income securities, mutual funds, and structured products. In addition, it offers cash management services; foreign currency transaction services; and life, auto, commercial, and homeowner's insurance products. Further, the company provides investment banking services comprising project and acquisition finance, debt and equity capital markets, principal investments, merger and acquisition, restructurings, and structured corporate lending; trust and asset management services, such as money market accounts, mutual and pension funds, private equity funds, payment trust, custody, and corporate trust; digital banking and revolving credit facility services. Additionally, it is involved in transportation, real estate brokerage, maintenance and remodeling, advertising and marketing, and outsourcing activities. The company operates 1,153 branches, 10,349 banking correspondents, and 590 mobile service spots; 227 kiosks; and 5,630 automatic teller machines. Bancolombia S.A. was founded in 1945 and is headquartered in MedellĂ­n, Colombia.

About Credicorp

Credicorp Ltd., through its banking and non-banking subsidiaries, provides a range of financial, insurance, and health services and products primarily in Peru and internationally. It operates through four segments: Banking, Insurance, Pension Funds, and Investment Banking. The company offers deposits, current accounts, loans, and credit facilities; and provides private pension fund management services to affiliated pensioners. It also issues insurance policies to cover losses in commercial property, transportation, marine vessels, automobile, life, health, and pension funds. In addition, the company offers investment brokerage and management services to corporations, institutional investors, governments, and foundations; and engages in structuring and placement of issues in the primary market, as well as the execution and negotiation of operations in the secondary market. Further, it structures securitization processes for companies; and manages mutual funds. Credicorp Ltd. was incorporated in 1995 and is based in Hamilton, Bermuda.

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