HSBC (NYSE:HSBC) & FirstRand (OTCMKTS:FANDF) Head-To-Head Review

HSBC (NYSE:HSBC) and FirstRand (OTCMKTS:FANDF) are both financial services companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Profitability

This table compares HSBC and FirstRand’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HSBC	19.02%	12.89%	0.82%
FirstRand	N/A	N/A	N/A

Dividends

HSBC pays an annual dividend of $6.18 per share and has a dividend yield of 14.8%. FirstRand pays an annual dividend of $1.17 per share and has a dividend yield of 34.0%. HSBC pays out 108.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FirstRand pays out 39.7% of its earnings in the form of a dividend. HSBC has increased its dividend for 1 consecutive years. FirstRand is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings for HSBC and FirstRand, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HSBC	2	3	4	0	2.22
FirstRand	0	1	0	0	2.00

HSBC presently has a consensus price target of $560.00, suggesting a potential upside of 1,239.39%. Given HSBC’s stronger consensus rating and higher possible upside, equities research analysts clearly believe HSBC is more favorable than FirstRand.

Valuation and Earnings

This table compares HSBC and FirstRand’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HSBC	$131.13 billion	1.21	$23.53 billion	$5.70	7.34
FirstRand	N/A	N/A	N/A	$2.94	1.17

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

Insider & Institutional Ownership

1.5% of HSBC shares are held by institutional investors. 0.0% of HSBC shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

HSBC beats FirstRand on 12 of the 14 factors compared between the two stocks.

About HSBC

HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.

About FirstRand

FirstRand Limited, together with its subsidiaries, provides transactional, lending, investment, and insurance products and services in South Africa, rest of Africa, the United Kingdom, Europe, Asia, the United States, and Australia. The company offers deposit and savings products; personal loans; and asset and invoice finance, as well as SME commercial, residential, and buy-to-let mortgages. It also provides life and short-term insurance products; and vehicle finance, instalment credit and fleet management, and corporate and investment banking services. In addition, the company offers asset management, as well as vehicle-related insurance services. It serves retail and public sector customers, SMEs, business, agricultural, and medium corporates. The company was incorporated in 1966 and is based in Sandton, South Africa.