Critical Survey: NU (NYSE:NU) and HSBC (NYSE:HSBC)

HSBC (NYSE:HSBC) and NU (NYSE:NU) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, valuation, profitability, analyst recommendations, earnings and dividends.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for HSBC and NU, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HSBC	1	8	3	0	2.17
NU	1	4	9	0	2.57

NU has a consensus target price of $17.91, indicating a potential upside of 14.70%. Given NU’s stronger consensus rating and higher probable upside, analysts clearly believe NU is more favorable than HSBC.

Risk & Volatility

HSBC has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, NU has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares HSBC and NU”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HSBC	$131.35 billion	2.78	$22.29 billion	$7.05	15.08
NU	$15.77 billion	4.81	$2.87 billion	$0.74	21.10

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

Profitability

This table compares HSBC and NU’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HSBC	18.19%	13.80%	0.83%
NU	18.65%	31.59%	4.97%

Insider and Institutional Ownership

1.5% of HSBC shares are held by institutional investors. Comparatively, 84.0% of NU shares are held by institutional investors. 0.0% of HSBC shares are held by insiders. Comparatively, 1.2% of NU shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

NU beats HSBC on 11 of the 14 factors compared between the two stocks.

About HSBC

HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.

About NU

Nu Holdings Ltd. is a holding company, which engages in the provision of digital banking services. The company was founded by David Vélez Osorno, Cristina Helena Zingaretti Junqueira, and Adam Edward Wible on February 26, 2016 and is headquartered in George Town, Cayman Islands.