Financial Survey: HSBC (NYSE:HSBC) vs. Canadian Imperial Bank of Commerce (NYSE:CM)

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

Volatility and Risk

HSBC has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Canadian Imperial Bank of Commerce has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Institutional & Insider Ownership

1.5% of HSBC shares are held by institutional investors. Comparatively, 49.9% of Canadian Imperial Bank of Commerce shares are held by institutional investors. 0.0% of HSBC shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations for HSBC and Canadian Imperial Bank of Commerce, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HSBC	0	6	4	2	2.67
Canadian Imperial Bank of Commerce	0	2	4	0	2.67

HSBC currently has a consensus price target of $63.00, suggesting a potential downside of 6.85%. Canadian Imperial Bank of Commerce has a consensus price target of $107.50, suggesting a potential upside of 29.56%. Given Canadian Imperial Bank of Commerce’s higher probable upside, analysts plainly believe Canadian Imperial Bank of Commerce is more favorable than HSBC.

Profitability

This table compares HSBC and Canadian Imperial Bank of Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HSBC	12.85%	12.78%	0.81%
Canadian Imperial Bank of Commerce	12.94%	14.67%	0.76%

Dividends

HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 2.9%. Canadian Imperial Bank of Commerce pays an annual dividend of $2.82 per share and has a dividend yield of 3.4%. HSBC pays out 41.7% of its earnings in the form of a dividend. Canadian Imperial Bank of Commerce pays out 47.6% 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. Canadian Imperial Bank of Commerce has raised its dividend for 14 consecutive years. Canadian Imperial Bank of Commerce is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares HSBC and Canadian Imperial Bank of Commerce”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HSBC	$70.05 billion	3.33	$23.98 billion	$4.75	14.24
Canadian Imperial Bank of Commerce	$28.06 billion	2.75	$5.23 billion	$5.92	14.02

HSBC has higher revenue and earnings than Canadian Imperial Bank of Commerce. Canadian Imperial Bank of Commerce is trading at a lower price-to-earnings ratio than HSBC, indicating that it is currently the more affordable of 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 Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce, a diversified financial institution, provides various financial products and services to personal, business, public sector, and institutional clients in Canada, the United States, and internationally. The company operates through Canadian Personal and Business Banking; Canadian Commercial Banking and Wealth Management; U.S. Commercial Banking and Wealth Management; Capital Markets and Direct Financial Services; and Corporate and Other segments. It offers checking, savings, and business accounts; mortgages; business, car, and other loans; lines of credit, student lines of credit, and agriculture loans; and small business financing and overdraft protection services. The company also provides investment and insurance services; credit cards; and ATMs, as well as mobile, online, and global money and wire transfer services. Canadian Imperial Bank of Commerce was founded in 1867 and is headquartered in Toronto, Canada.