Head-To-Head Review: China Merchants Bank (OTCMKTS:CIHKY) vs. Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL)

Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) and China Merchants Bank (OTCMKTS:CIHKY) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Profitability

This table compares Home Federal Bancorp, Inc. of Louisiana and China Merchants Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Federal Bancorp, Inc. of Louisiana	17.99%	11.15%	1.02%
China Merchants Bank	32.69%	12.45%	1.23%

Dividends

Home Federal Bancorp, Inc. of Louisiana pays an annual dividend of $0.60 per share and has a dividend yield of 2.6%. China Merchants Bank pays an annual dividend of $1.18 per share and has a dividend yield of 3.5%. Home Federal Bancorp, Inc. of Louisiana pays out 28.6% of its earnings in the form of a dividend. China Merchants Bank pays out 28.4% 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. Home Federal Bancorp, Inc. of Louisiana has raised its dividend for 11 consecutive years. China Merchants Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

21.1% of Home Federal Bancorp, Inc. of Louisiana shares are held by institutional investors. 19.0% of Home Federal Bancorp, Inc. of Louisiana shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Home Federal Bancorp, Inc. of Louisiana and China Merchants Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Federal Bancorp, Inc. of Louisiana	$35.17 million	1.99	$6.17 million	$2.10	11.00
China Merchants Bank	$65.04 billion	2.63	$20.89 billion	$4.15	8.17

China Merchants Bank has higher revenue and earnings than Home Federal Bancorp, Inc. of Louisiana. China Merchants Bank is trading at a lower price-to-earnings ratio than Home Federal Bancorp, Inc. of Louisiana, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Home Federal Bancorp, Inc. of Louisiana has a beta of 0.41, suggesting that its share price is 59% less volatile than the S&P 500. Comparatively, China Merchants Bank has a beta of 0.18, suggesting that its share price is 82% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Home Federal Bancorp, Inc. of Louisiana and China Merchants Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Federal Bancorp, Inc. of Louisiana	0	1	0	0	2.00
China Merchants Bank	0	1	0	0	2.00

Summary

China Merchants Bank beats Home Federal Bancorp, Inc. of Louisiana on 9 of the 14 factors compared between the two stocks.

About Home Federal Bancorp, Inc. of Louisiana

Home Federal Bancorp, Inc. of Louisiana operates as the holding company for Home Federal Bank that provides various financial services to individuals, corporate entities, and other organizations. The company accepts various deposits, such as passbook savings, certificates of deposit, and demand deposit accounts. Its loan products include one-to-four family residential real estate loans; commercial real estate secured loans; multi-family residential loans; commercial business loans; land loans; construction loans; home equity and second mortgage loans; lines of credit; and consumer non-real estate loans, including loans secured by deposit accounts, automobile loans, overdrafts, and other unsecured loans. The company operates through branches in Shreveport, Bossier City, Minden, and Benton, Louisiana. The company was founded in 1924 and is based in Shreveport, Louisiana.

About China Merchants Bank

China Merchants Bank Co., Ltd., together with its subsidiaries, provides various banking products and services. It operates through Wholesale Finance Business, Retail Finance Business, and Other Business segments. The company offers current, demand, time, call, savings, notice, and renminbi accounts. Its loan products include personal commercial real estate, consumption, housing, and car loans; loans to finance for studying abroad; micro-business loans; mortgage loans for equipment; joint guarantee, special guarantee, and housing mortgage loan; bank acceptance, discount, liquid capital, and fixed asset loans; and loans for vessels. The company also offers credit cards; insurance products; open-ended funds; discount and guarantees for commercial bills, redemption of commercial bills, and guaranteed discount for commercial acceptance bills; and financial consultation, debt financing underwriting, merger and acquisition financing, and equity financing and enterprise listing services. In addition, it provides forfeiting and risk participation, escrow, cross-border RMB clearing, and interbank services; and risk and financial management, cross-border RMB and oversea financing, international factoring and settlement, and trade finance services. Further, the company offers financial leasing and guarantee, investment and wealth management, forex option and gold trading, forex express trading, international, offshore and private banking, custody, pension, and electronic banking services. The company also operates in Hong Kong, New York, London, Singapore, Luxembourg, Sydney, and Taipei. China Merchants Bank Co., Ltd. was founded in 1987 and is headquartered in Shenzhen, China.