Reviewing Itau Unibanco (NYSE:ITUB) and Bankwell Financial Group (NYSE:BWFG)

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Itau Unibanco (NYSE:ITUB) and Bankwell Financial Group (NASDAQ:BWFG) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Dividends

Itau Unibanco pays an annual dividend of $0.05 per share and has a dividend yield of 0.5%. Bankwell Financial Group pays an annual dividend of $0.52 per share and has a dividend yield of 1.9%. Itau Unibanco pays out 7.5% of its earnings in the form of a dividend. Bankwell Financial Group pays out 21.8% 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. Itau Unibanco has raised its dividend for 2 consecutive years and Bankwell Financial Group has raised its dividend for 3 consecutive years. Bankwell Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Itau Unibanco has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500. Comparatively, Bankwell Financial Group has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500.

Institutional and Insider Ownership

4.5% of Itau Unibanco shares are held by institutional investors. Comparatively, 53.0% of Bankwell Financial Group shares are held by institutional investors. 16.3% of Bankwell Financial Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Itau Unibanco and Bankwell Financial Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Itau Unibanco 1 5 0 0 1.83
Bankwell Financial Group 0 1 1 0 2.50

Bankwell Financial Group has a consensus target price of $34.00, suggesting a potential upside of 22.74%. Given Bankwell Financial Group’s stronger consensus rating and higher possible upside, analysts clearly believe Bankwell Financial Group is more favorable than Itau Unibanco.

Profitability

This table compares Itau Unibanco and Bankwell Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Itau Unibanco 16.01% 18.06% 1.70%
Bankwell Financial Group 20.64% 11.11% 1.03%

Valuation & Earnings

This table compares Itau Unibanco and Bankwell Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Itau Unibanco $46.96 billion 2.04 $6.81 billion $0.67 14.72
Bankwell Financial Group $83.96 million 2.60 $17.43 million $2.39 11.59

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

Summary

Bankwell Financial Group beats Itau Unibanco on 10 of the 17 factors compared between the two stocks.

Itau Unibanco Company Profile

Itaú Unibanco Holding S.A. provides a range of financial products and services to individuals and corporate clients in Brazil and internationally. The company operates in three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It accepts demand, savings, and time deposits; and offers payroll, mortgage, personal, vehicle, and corporate loans, as well as very small, small, and middle market loans. The company also provides credits cards; investment and private banking services; property, casualty, and life insurance products; reinsurance products; and private pension plans and premium bonds. In addition, it offers consumer finance credit; and capitalization, leasing, and brokerage services. As of December 31, 2017, the company operated through a network of 4,981 branches and client service branches, as well as 46,965 automated teller machines. The company was formerly known as Itaú Unibanco Banco Múltiplo S.A. and changed its name to Itaú Unibanco Holding S.A. in April 2009. Itaú Unibanco Holding S.A. was founded in 1945 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.

Bankwell Financial Group Company Profile

Bankwell Financial Group, Inc. operates as the bank holding company for Bankwell Bank that provides a range of banking services to commercial and consumer customers in Connecticut. It accepts checking, savings, and money market accounts; and time, demand, and NOW deposits, as well as certificates of deposit. The company also provides commercial lending products, including residential real estate loans, owner-occupied commercial real estate loans, commercial real estate investment loans, business term loans, equipment financing, and lines of credit to small and mid-sized businesses, as well as real estate construction and development loans; and consumer loans, such as loans secured by savings or certificate accounts, or automobiles, as well as unsecured personal loans and overdraft lines of credit. As of June 9, 2018, it operated through a network of 12 branches. The company was formerly known as BNC Financial Group, Inc. and changed its name to Bankwell Financial Group, Inc. in September 2013. Bankwell Financial Group, Inc. was founded in 2002 and is headquartered in New Canaan, Connecticut.

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