Banco Macro (NYSE:BMA) and Royal Bank of Canada (NYSE:RY) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, earnings and valuation.

Insider & Institutional Ownership

21.2% of Banco Macro shares are owned by institutional investors. Comparatively, 41.7% of Royal Bank of Canada shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Banco Macro pays an annual dividend of $2.23 per share and has a dividend yield of 4.6%. Royal Bank of Canada pays an annual dividend of $2.87 per share and has a dividend yield of 3.7%. Banco Macro pays out 28.5% of its earnings in the form of a dividend. Royal Bank of Canada pays out 44.0% 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. Banco Macro has raised its dividend for 2 consecutive years and Royal Bank of Canada has raised its dividend for 2 consecutive years. Banco Macro is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Banco Macro and Royal Bank of Canada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Banco Macro 22.36% 27.90% 5.08%
Royal Bank of Canada 20.85% 17.52% 0.96%

Valuation & Earnings

This table compares Banco Macro and Royal Bank of Canada’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Banco Macro $2.15 billion 1.47 $558.39 million $7.82 6.14
Royal Bank of Canada $43.93 billion 2.53 $9.64 billion $6.53 11.88

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Banco Macro and Royal Bank of Canada, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Banco Macro 0 1 2 0 2.67
Royal Bank of Canada 1 2 7 0 2.60

Banco Macro currently has a consensus price target of $50.00, indicating a potential upside of 4.17%. Royal Bank of Canada has a consensus price target of $100.00, indicating a potential upside of 28.93%. Given Royal Bank of Canada’s higher possible upside, analysts plainly believe Royal Bank of Canada is more favorable than Banco Macro.

Volatility & Risk

Banco Macro has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Royal Bank of Canada has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Summary

Royal Bank of Canada beats Banco Macro on 8 of the 15 factors compared between the two stocks.

Banco Macro Company Profile

Banco Macro S.A. provides various banking products and services to individuals and corporate customers in Argentina. It offers various retail products and services, such as savings and checking accounts, time deposits, credit and debit cards, consumer finance loans, mortgage loans, automobile loans, overdrafts, credit-related services, home and car insurance coverage, tax collection, utility payments, automated teller machines (ATMs), and money transfers. The company also provides personal loans, document discounts, mortgages, overdrafts, pledged loans, and credit card loans to retail customers. In addition, it offers corporate banking products and services that include deposits, lending, check cashing advances and factoring, guaranteed loans, credit lines for financing foreign trade, and cash management services. Further, the company provides trust, payroll, and financial agency services, as well as corporate credit cards and other specialty products; transaction services, such as collection services, payments to suppliers, payroll services, foreign exchange transactions, and foreign trade services; and information services, such as Datanet and Interpymes services to corporate customers. As of December 31, 2017, it operated through a network of 445 branches, 1,443 ATMs, 912 self-service terminals, and service points. Banco Macro S.A. also offers Internet banking services. The company was incorporated in 1988 and is headquartered in Buenos Aires, Argentina.

Royal Bank of Canada Company Profile

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers check and savings accounts; home equity and auto financing, personal lending, private banking, mutual fund, self-directed brokerage account, and guaranteed investment certificate services; and credit cards, and payment products and solutions for individuals. It also provides lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, and trade products and services to small and medium-sized commercial businesses. In addition, this segment offers international financing and trade promotion services through branches, automated teller machines, and online and mobile banking. The company's Wealth Management provides investment, trust, banking, credit, and other wealth management solutions to high and ultra-high net worth clients; and asset management products to institutional and individual clients through its distribution channels and third-party distributors. Its Insurance segment offers life, health, home, auto, travel, wealth, annuities, and reinsurance advice and solutions; and creditor and business insurance services to individual, business, and group clients through its field sales force, advice centers, and online, as well as through independent insurance advisors and affinity relationships. The company's Investor & Treasury Services segment provides asset, cash management, transaction banking, and treasury services to institutional clients; correspondent banking and trade finance services for financial institutions; and short-term funding and liquidity management services. Its Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, sale, and trading services for corporations, institutional investors, asset managers, governments, and central banks. The company was founded in 1864 and is headquartered in Toronto, Canada.

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