HSBC Holdings PLC (NYSE: HSBC) and Stonegate Bank (NASDAQ:SGBK) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of recent ratings for HSBC Holdings PLC and Stonegate Bank, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HSBC Holdings PLC 0 5 4 0 2.44
Stonegate Bank 0 3 0 0 2.00

HSBC Holdings PLC currently has a consensus price target of $27.00, suggesting a potential downside of 45.45%. Stonegate Bank has a consensus price target of $49.00, suggesting a potential downside of 5.08%. Given Stonegate Bank’s higher possible upside, analysts plainly believe Stonegate Bank is more favorable than HSBC Holdings PLC.

Institutional and Insider Ownership

2.2% of HSBC Holdings PLC shares are held by institutional investors. Comparatively, 65.2% of Stonegate Bank shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

HSBC Holdings PLC pays an annual dividend of $2.00 per share and has a dividend yield of 4.0%. Stonegate Bank pays an annual dividend of $0.32 per share and has a dividend yield of 0.6%. HSBC Holdings PLC pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Stonegate Bank pays out 14.7% of its earnings in the form of a dividend. HSBC Holdings PLC has increased its dividend for 3 consecutive years. HSBC Holdings PLC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

HSBC Holdings PLC has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Stonegate Bank has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.

Profitability

This table compares HSBC Holdings PLC and Stonegate Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HSBC Holdings PLC 1.42% 2.08% 0.16%
Stonegate Bank 25.68% N/A N/A

Valuation & Earnings

This table compares HSBC Holdings PLC and Stonegate Bank’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
HSBC Holdings PLC $42.93 billion 4.63 $2.01 billion $0.50 99.00
Stonegate Bank $109.67 million 7.21 $33.24 million $2.17 23.79

HSBC Holdings PLC has higher revenue and earnings than Stonegate Bank. Stonegate Bank is trading at a lower price-to-earnings ratio than HSBC Holdings PLC, indicating that it is currently the more affordable of the two stocks.

Summary

HSBC Holdings PLC beats Stonegate Bank on 10 of the 16 factors compared between the two stocks.

HSBC Holdings PLC Company Profile

HSBC Holdings plc (HSBC) is the banking and financial services company. The Company manages its products and services through four businesses: Retail Banking and Wealth Management (RBWM), Commercial Banking (CMB), Global Banking and Markets (GB&M), and Global Private Banking (GPB). It operates across various geographical regions, which include Europe, Asia, Middle East and North Africa, North America and Latin America. RBWM business offers Retail Banking, Wealth Management, Asset Management and Insurance. CMB services include working capital, term loans, payment services and international trade facilitation, among other services, as well as expertise in mergers and acquisitions, and access to financial markets. GB&M supports government, corporate and institutional clients across the world. GPB’s products and services include Investment Management, Private Wealth Solutions, and a range of Private Banking services.

Stonegate Bank Company Profile

Stonegate Bank (the Bank) is a state chartered commercial bank in the State of Florida. The Bank provides a full range of banking services to individual and corporate customers from its branch locations in Southeast and West Florida. The Bank provides personal banking, business banking and wealth management services. The Bank’s loans portfolio includes commercial real estate, construction and land development, residential real estate, commercial and consumer loans. Its personal banking services include checking account, money market, savings account, certificate of deposits, individual retirement accounts, consumer loans and residential mortgage loans. It also offers card services, such as credit cards and debit cards. Its wealth management services include asset management, trust services, estate planning, insurance planning and retirement planning for business owners.

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