Analyzing Banco Bradesco (NYSE:BBD) & HomeStreet (NASDAQ:HMST)

Banco Bradesco (NYSE:BBD) and HomeStreet (NASDAQ:HMST) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, institutional ownership, profitability, analyst recommendations and dividends.

Valuation & Earnings

This table compares Banco Bradesco and HomeStreet’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Banco Bradesco $32.38 billion 1.30 $5.72 billion $0.71 6.11
HomeStreet $352.04 million 2.62 $17.51 million $1.70 25.39

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

Risk and Volatility

Banco Bradesco has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, HomeStreet has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.

Dividends

Banco Bradesco pays an annual dividend of $0.03 per share and has a dividend yield of 0.7%. HomeStreet pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. Banco Bradesco pays out 4.2% of its earnings in the form of a dividend. HomeStreet pays out 58.8% 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. HomeStreet has increased its dividend for 1 consecutive years. HomeStreet is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings for Banco Bradesco and HomeStreet, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Banco Bradesco 0 1 2 0 2.67
HomeStreet 0 2 2 0 2.50

HomeStreet has a consensus target price of $42.50, indicating a potential downside of 1.54%. Given HomeStreet’s higher possible upside, analysts clearly believe HomeStreet is more favorable than Banco Bradesco.

Insider and Institutional Ownership

2.1% of Banco Bradesco shares are owned by institutional investors. Comparatively, 83.7% of HomeStreet shares are owned by institutional investors. 3.6% of HomeStreet shares are owned 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.

Profitability

This table compares Banco Bradesco and HomeStreet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Banco Bradesco 15.08% 14.39% 1.32%
HomeStreet 16.89% 10.39% 1.01%

Summary

HomeStreet beats Banco Bradesco on 10 of the 16 factors compared between the two stocks.

Banco Bradesco Company Profile

Banco Bradesco S.A., together with its subsidiaries, provides various banking products and financial services to individuals, corporates, and businesses in Brazil and internationally. It operates through two segments, Banking; and insurance, pension plans and capitalization bonds. The company offers checking and savings accounts, demand deposits, time deposits, salary, and interbank deposits. It also provides working capital, personal, microcredit, payroll-deductible, rural, and housing loans; import and export financing, vehicle financing, and BNDES/finame onlending services; rural credits; international banking services, including foreign trade finance and foreign currency loans, foreign exchange operations and international sureties, and lines of credit and banking services, as well as overdrafts, and credit, debit, and pre-paid cards. In addition, the company offers cash and asset management solutions; administration services; solutions for the public authorities and capital markets; investment platforms; intermediation and trading services; life and personal accident, health, automobiles, property/casualty, and liability insurances; reinsurance services; capitalization bonds; and various pension plans, as well as purchases consortiums. Banco Bradesco S.A. was founded in 1943 and is headquartered in Osasco, Brazil.

HomeStreet Company Profile

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank, a state-chartered commercial bank that provides commercial and consumer banking services primarily in the Western United States. The company offers deposit and insurance products and services. Its loan products include commercial business and agriculture loans, single family residential mortgages, consumer loans, commercial loans secured by residential and commercial real estate, and construction loans for residential and commercial real estate development, as well as consumer installment loans and permanent loans on commercial real estate and single family residences. In addition, the company offers its products and services through bank branches, loan production offices, and ATMs, as well as through online, mobile, and telephone banking. As of December 31, 2020, it operated 62 full-service bank branches located in Washington state, Northern and Southern California, the Portland, Oregon, and Hawaii; and five primary stand-alone commercial lending centers in Central Washington, Oregon, Southern California, Idaho, and Utah. HomeStreet, Inc. serves small and medium sized businesses, real estate investors, professional firms, and individuals. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was incorporated in 1921 and is headquartered in Seattle, Washington.

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