Analyzing Shinhan Financial Group (SHG) and Sandy Spring Bancorp (SASR)

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Shinhan Financial Group (NYSE:SHG) and Sandy Spring Bancorp (NASDAQ:SASR) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Dividends

Shinhan Financial Group pays an annual dividend of $1.03 per share and has a dividend yield of 2.7%. Sandy Spring Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 3.3%. Shinhan Financial Group pays out 18.0% of its earnings in the form of a dividend. Sandy Spring Bancorp pays out 39.2% 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. Shinhan Financial Group has raised its dividend for 3 consecutive years and Sandy Spring Bancorp has raised its dividend for 8 consecutive years. Sandy Spring Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

2.4% of Shinhan Financial Group shares are held by institutional investors. Comparatively, 69.0% of Sandy Spring Bancorp shares are held by institutional investors. 1.0% of Shinhan Financial Group shares are held by insiders. Comparatively, 3.3% of Sandy Spring Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for Shinhan Financial Group and Sandy Spring Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shinhan Financial Group 0 0 2 0 3.00
Sandy Spring Bancorp 0 2 3 0 2.60

Sandy Spring Bancorp has a consensus target price of $38.75, indicating a potential upside of 14.21%. Given Sandy Spring Bancorp’s higher probable upside, analysts clearly believe Sandy Spring Bancorp is more favorable than Shinhan Financial Group.

Profitability

This table compares Shinhan Financial Group and Sandy Spring Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shinhan Financial Group 17.68% 8.43% 0.65%
Sandy Spring Bancorp 26.19% 10.10% 1.29%

Risk and Volatility

Shinhan Financial Group has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500. Comparatively, Sandy Spring Bancorp has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Earnings and Valuation

This table compares Shinhan Financial Group and Sandy Spring Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shinhan Financial Group $15.37 billion 1.17 $2.58 billion $5.73 6.59
Sandy Spring Bancorp $385.13 million 3.13 $100.86 million $2.86 11.86

Shinhan Financial Group has higher revenue and earnings than Sandy Spring Bancorp. Shinhan Financial Group is trading at a lower price-to-earnings ratio than Sandy Spring Bancorp, indicating that it is currently the more affordable of the two stocks.

Summary

Sandy Spring Bancorp beats Shinhan Financial Group on 11 of the 17 factors compared between the two stocks.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through five segments: Banking, Credit Cards, Securities, Life Insurance, and Others. It offers retail banking services, including mortgage and home equity, and retail lending; demand, savings, and fixed deposit-taking; checking accounts; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting, and securitization; derivatives services comprising securities and derivative products, and foreign exchange trading; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. As of December 31, 2017, it operated a network of 865 service centers; 6,076 ATMs; 9 cash dispensers; and 35 digital kiosks. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.

About Sandy Spring Bancorp

Sandy Spring Bancorp, Inc. operates as the bank holding company for Sandy Spring Bank that provides commercial banking services to individuals and businesses in central Maryland, Northern Virginia, and Washington D.C. markets. It operates through three segments: Community Banking, Insurance, and Investment Management. The Community Banking segment provides financial products and services, including various loan and deposit products to individuals and businesses. Its deposit products include demand, money market savings, regular savings, and time deposits. This segment's loan portfolio comprises residential real estate loans; commercial real estate loans, commercial construction loans, and other commercial loans; and consumer loans comprising home equity loans and lines, installment loans, and personal lines of credit. The Insurance segment provides general insurance agency services and annuities. The Investment Management segment provides comprehensive investment management and financial planning to individuals, families, small businesses, and associations, including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis, and estate planning. The company also provides mortgage banking, equipment leasing, personal trust, and wealth management services. As of December 31, 2017, it operated 42 community offices and 6 financial centers. The company was founded in 1868 and is headquartered in Olney, Maryland.

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