Analyzing HDFC Bank (NYSE:HDB) and Midland States Bancorp (NASDAQ:MSBI)

Midland States Bancorp (NASDAQ:MSBI) and HDFC Bank (NYSE:HDB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Risk and Volatility

Midland States Bancorp has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, HDFC Bank has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Profitability

This table compares Midland States Bancorp and HDFC Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Midland States Bancorp	9.40%	13.32%	0.92%
HDFC Bank	15.96%	11.84%	1.64%

Dividends

Midland States Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 4.0%. HDFC Bank pays an annual dividend of $0.34 per share and has a dividend yield of 1.5%. Midland States Bancorp pays out 84.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HDFC Bank pays out 20.0% of its earnings in the form of a dividend. Midland States Bancorp has raised its dividend for 1 consecutive years. Midland States Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Midland States Bancorp and HDFC Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Midland States Bancorp	$476.05 million	1.43	-$124.28 million	$1.56	21.04
HDFC Bank	$1,925.67 billion	0.06	$7.51 billion	$1.70	13.00

HDFC Bank has higher revenue and earnings than Midland States Bancorp. HDFC Bank is trading at a lower price-to-earnings ratio than Midland States Bancorp, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

60.9% of Midland States Bancorp shares are owned by institutional investors. Comparatively, 17.6% of HDFC Bank shares are owned by institutional investors. 8.6% of Midland States Bancorp shares are owned by company insiders. Comparatively, 1.0% of HDFC Bank shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Midland States Bancorp and HDFC Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Midland States Bancorp	0	5	0	1	2.33
HDFC Bank	0	3	1	0	2.25

Midland States Bancorp presently has a consensus price target of $29.10, indicating a potential downside of 11.34%. Given Midland States Bancorp’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Midland States Bancorp is more favorable than HDFC Bank.

Summary

Midland States Bancorp beats HDFC Bank on 11 of the 18 factors compared between the two stocks.

About Midland States Bancorp

Midland States Bancorp, Inc. operates as a financial holding company for Midland States Bank that provides various banking products and services to individuals, businesses, municipalities, and other entities. It operates through Banking, Wealth Management, and Other segments. The company provides a range of financial products and services to consumers and businesses, including commercial loans to finance agricultural equipment and production; and commercial real estate loans for owner occupied offices, warehouses and production facilities, office buildings, hotels, mixed-use residential and commercial facilities, retail centers, multifamily properties, and assisted living facilities. In addition, it offers construction and land development loans, such as real estate investment properties and residential developments, and lesser extent loans; and residential real estate loans, which includes first and second mortgage loans, and home equity lines of credit consisting of loans secured by first or second mortgages on primarily owner occupied primary residences. The company also provides consumer installment loans for the purchase of cars, boats and other recreational vehicles, as well as for the purchase of major appliances and other home improvement projects; and commercial equipment leasing programs for manufacturing, construction, transportation, and healthcare industries. Further, it offers merchant services; deposit products, including checking, time, savings, money market, and certificates of deposit, as well as sweep accounts; letters of credit; and trust and wealth management services, such as financial and estate planning, trustee and custodial, investment management, tax, insurance, and business planning, corporate retirement plan consulting and administration, and retail brokerage services. The company was founded in 1881 and is headquartered in Effingham, Illinois.

About HDFC Bank

HDFC Bank Limited provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in three segments: Wholesale Banking, Retail Banking, and Treasury Services. It accepts savings, salary, current, rural, public provident fund, pension, and demat accounts; fixed and recurring deposits; and safe deposit lockers, as well as offshore accounts and deposits, and overdrafts against fixed deposits. The company also provides personal, home, car, two-wheeler, business, doctor, educational, gold, consumer, and rural loans; loans against properties, securities, fixed deposits, rental receivables, and assets; loans for professionals; government sponsored programs; and loans on credit card, as well as working capital and commercial/construction equipment finance, healthcare/medical equipment and commercial vehicle finance, dealer finance, and term loans. In addition, it offers credit, debit, prepaid, and forex cards; payment and collection, export, import, remittance, bank guarantee, letter of credit, trade, hedging, and merchant and cash management services; insurance and investment products. Further, the company provides short term finance, bill discounting, structured finance, export credit, loan repayment, and documents collection services; online and wholesale, mobile, and phone banking services; unified payment interface, immediate payment, national electronic funds transfer, and real time gross settlement services; and channel financing, vendor financing, reimbursement account, money market, derivatives, employee trusts, cash surplus corporates, tax payment, and bankers to rights/public issue services, as well as financial solutions for supply chain partners and agricultural customers. It operates branches and automated teller machines in various cities/towns. The company was incorporated in 1994 and is headquartered in Mumbai, India.