Critical Comparison: First BanCorp. (NYSE:FBP) & KBC Group (OTCMKTS:KBCSY)

First BanCorp. (NYSE:FBP) and KBC Group (OTCMKTS:KBCSY) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares First BanCorp. and KBC Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First BanCorp.	29.24%	18.03%	1.84%
KBC Group	15.58%	13.42%	0.94%

Insider & Institutional Ownership

97.9% of First BanCorp. shares are held by institutional investors. 1.9% of First BanCorp. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

First BanCorp. pays an annual dividend of $0.80 per share and has a dividend yield of 3.0%. KBC Group pays an annual dividend of $3.19 per share and has a dividend yield of 4.6%. First BanCorp. pays out 33.8% of its earnings in the form of a dividend. KBC Group pays out 60.6% 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. First BanCorp. has increased its dividend for 6 consecutive years.

Volatility and Risk

First BanCorp. has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, KBC Group has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for First BanCorp. and KBC Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First BanCorp.	0	3	5	1	2.78
KBC Group	1	4	2	0	2.14

First BanCorp. presently has a consensus target price of $29.25, indicating a potential upside of 10.61%. Given First BanCorp.’s stronger consensus rating and higher possible upside, research analysts clearly believe First BanCorp. is more favorable than KBC Group.

Valuation and Earnings

This table compares First BanCorp. and KBC Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First BanCorp.	$1.26 billion	3.22	$344.87 million	$2.37	11.16
KBC Group	$26.56 billion	2.17	$4.04 billion	$5.26	13.10

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

Summary

First BanCorp. beats KBC Group on 13 of the 18 factors compared between the two stocks.

About First BanCorp.

First BanCorp. operates as a bank holding company for FirstBank Puerto Rico that provides a range of financial products and services to consumers and commercial customers. The company operates through six segments: Commercial and Corporate Banking, Mortgage Banking, Consumer (Retail) Banking, Treasury and Investments, United States Operations, and Virgin Islands Operations. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, as well as other products, such as cash management and business management services. The Mortgage Banking segment engages in the origination, sale, and servicing of various residential mortgage loans; hedging activities; and purchase of mortgage loans from branch and mortgage bankers. The Consumer (Retail) Banking segment provides auto loans, finance leases, boat and personal loans, credit card loans, and lines of credit; and interest-bearing and non-interest-bearing checking and savings accounts, and individual retirement accounts and retail certificates of deposit (CDs), as well as insurance agency services. The Treasury and Investments segment offers funding and liquidity management services. The United States Operations segment provides checking, savings, and money market accounts, as well as retail CDs; traditional commercial and industrial, and commercial real estate loans, residential mortgages, term and construction loan, home equity loans, lines of credit, FHLB advances, and brokered CDs; and internet banking, cash management, remote deposit capture, and automated clearing house transactions services. The Virgin Islands Operations segment is involved in consumer, commercial lending, and deposit-taking activities. First BanCorp. was founded in 1948 and is headquartered in San Juan, Puerto Rico.

About KBC Group

KBC Group NV, together with its subsidiaries, provides integrated bank-insurance services primarily for retail, private banking, small and medium sized enterprises, and mid-cap clients. The company offers demand deposits and savings accounts; home and mortgage loans; consumer finance and SME funding services; credit, investment fund and asset management, and life and non-life insurance; and cash management, payments, trade finance, lease, money market, capital market products, and stockbroking services. It also provides digital and mobile banking services. The company was formerly known as KBC Bank and Insurance Holding Company NV and changed its name to KBC Group NV in March 2005. KBC Group NV was incorporated in 1935 and is headquartered in Brussels, Belgium.