Financial Review: City (NASDAQ:CHCO) & Credicorp (NYSE:BAP)

City (NASDAQ:CHCO) and Credicorp (NYSE:BAP) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.

Volatility & Risk

City has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500. Comparatively, Credicorp has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Valuation & Earnings

This table compares City and Credicorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$398.98 million	5.00	$130.49 million	$9.14	15.53
Credicorp	$8.01 billion	4.55	$1.94 billion	$26.99	14.30

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

Profitability

This table compares City and Credicorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City	32.58%	16.34%	1.95%
Credicorp	25.04%	20.52%	2.87%

Analyst Recommendations

This is a summary of current ratings and target prices for City and Credicorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	2	1	0	2.33
Credicorp	0	2	5	0	2.71

City currently has a consensus target price of $136.50, suggesting a potential downside of 3.85%. Credicorp has a consensus target price of $431.80, suggesting a potential upside of 11.86%. Given Credicorp’s stronger consensus rating and higher possible upside, analysts clearly believe Credicorp is more favorable than City.

Insider and Institutional Ownership

72.4% of City shares are owned by institutional investors. Comparatively, 89.8% of Credicorp shares are owned by institutional investors. 1.8% of City shares are owned by company insiders. Comparatively, 15.9% of Credicorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

City pays an annual dividend of $3.48 per share and has a dividend yield of 2.5%. Credicorp pays an annual dividend of $14.48 per share and has a dividend yield of 3.8%. City pays out 38.1% of its earnings in the form of a dividend. Credicorp pays out 53.6% 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. City has raised its dividend for 6 consecutive years and Credicorp has raised its dividend for 3 consecutive years.

Summary

Credicorp beats City on 12 of the 17 factors compared between the two stocks.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

About Credicorp

Credicorp Ltd. provides various financial, insurance, and health services and products primarily in Peru and internationally. It operates through Universal Banking, Insurance and Pensions, Microfinance, and Investment Banking and Equity Management segments. The Universal Banking segment grants various credits and financial instruments to individuals and legal entities; and various deposits and current accounts. The Insurance and Pensions segment issues insurance policies to cover losses in commercial property, transport, marine vessels, automobiles, life, health, and pensions; and management services for private pension funds. The Microfinance segment provides management of loans, deposits, and current accounts for small and microenterprises. The Investment Banking and Equity Management segment is involved in provision of brokerage and investment management services for corporations, institutional investors, governments, and foundations; structuring and placement of issues in the primary market; execution and negotiation of transactions in the secondary market; and structuring of securitization processes for corporate customers and manages mutual funds. The company was founded in 1889 and is headquartered in Lima, Peru.