Analyzing Itau Unibanco (NYSE:ITUB) & Intesa Sanpaolo (OTCMKTS:ISNPY)

Intesa Sanpaolo (OTCMKTS:ISNPY) and Itau Unibanco (NYSE:ITUB) are both large-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitability.

Profitability

This table compares Intesa Sanpaolo and Itau Unibanco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Intesa Sanpaolo	22.05%	13.27%	0.95%
Itau Unibanco	14.05%	19.48%	1.48%

Analyst Ratings

This is a breakdown of recent ratings for Intesa Sanpaolo and Itau Unibanco, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Intesa Sanpaolo	0	3	1	1	2.60
Itau Unibanco	0	2	2	1	2.80

Itau Unibanco has a consensus price target of $6.27, suggesting a potential downside of 12.45%. Given Itau Unibanco’s stronger consensus rating and higher possible upside, analysts clearly believe Itau Unibanco is more favorable than Intesa Sanpaolo.

Volatility & Risk

Intesa Sanpaolo has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Itau Unibanco has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Institutional and Insider Ownership

1.2% of Intesa Sanpaolo shares are owned by institutional investors. 0.6% of Itau Unibanco 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.

Earnings & Valuation

This table compares Intesa Sanpaolo and Itau Unibanco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Intesa Sanpaolo	$48.17 billion	2.43	$9.38 billion	$3.33	11.85
Itau Unibanco	$62.19 billion	1.24	$7.62 billion	$0.71	10.09

Intesa Sanpaolo has higher earnings, but lower revenue than Itau Unibanco. Itau Unibanco is trading at a lower price-to-earnings ratio than Intesa Sanpaolo, indicating that it is currently the more affordable of the two stocks.

Dividends

Intesa Sanpaolo pays an annual dividend of $1.68 per share and has a dividend yield of 4.3%. Itau Unibanco pays an annual dividend of $0.03 per share and has a dividend yield of 0.4%. Intesa Sanpaolo pays out 50.5% of its earnings in the form of a dividend. Itau Unibanco pays out 4.2% 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.

About Intesa Sanpaolo

Intesa Sanpaolo S.p.A. provides various financial products and services primarily in Italy. It operates through six segments: Banca dei Territori, IMI Corporate & Investment Banking, International Subsidiary Banks, Asset Management, Private Banking, and Insurance. The company offers lending and deposit products; private and commercial banking, corporate and transaction banking, structured finance, investment banking, public finance, and capital markets; industrial credit, leasing, and factoring; asset management; life and non-life insurance and pension products; asset and wealth management; private investments; and bancassurance products. The company serves individuals, small and medium-sized businesses, non-profit customers, corporates and financial institutions, public administration, private clients and high net worth individuals, institutional clientele, and other customers. Intesa Sanpaolo S.p.A. was founded in 1998 and is headquartered in Turin, Italy.

About Itau Unibanco

Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It offers current account; loans; credit and debit cards; investment and commercial banking services; real estate lending services; financing and investment services; economic, financial and brokerage advisory; and leasing and foreign exchange services. The company also provides property and casualty insurance products covering loss, damage, or liabilities for assets or persons, as well as life insurance products covering death and personal accident. It serves retail customers, account and non-account holders, individuals and legal entities, high income clients, microenterprises, and small companies, as well as middle-market companies and high net worth clients. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.