Royal Bank Scotland PLC (The) (NYSE: RBS) and Credit Suisse Group (NYSE:CS) are both large-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, profitability, institutional ownership, risk, analyst recommendations, earnings and valuation.

Risk and Volatility

Royal Bank Scotland PLC (The) has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, Credit Suisse Group has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Insider & Institutional Ownership

0.5% of Royal Bank Scotland PLC (The) shares are owned by institutional investors. Comparatively, 2.9% of Credit Suisse Group shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Royal Bank Scotland PLC (The) and Credit Suisse Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Bank Scotland PLC (The) $17.52 billion 2.45 -$5.40 billion ($0.91) -7.97
Credit Suisse Group $22.22 billion 1.83 -$1.79 billion ($0.70) -22.80

Credit Suisse Group has higher revenue and earnings than Royal Bank Scotland PLC (The). Credit Suisse Group is trading at a lower price-to-earnings ratio than Royal Bank Scotland PLC (The), indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for Royal Bank Scotland PLC (The) and Credit Suisse Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Bank Scotland PLC (The) 3 8 5 0 2.13
Credit Suisse Group 1 0 10 0 2.82

Credit Suisse Group has a consensus target price of $16.00, indicating a potential upside of 0.25%. Given Credit Suisse Group’s stronger consensus rating and higher possible upside, analysts clearly believe Credit Suisse Group is more favorable than Royal Bank Scotland PLC (The).

Profitability

This table compares Royal Bank Scotland PLC (The) and Credit Suisse Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Bank Scotland PLC (The) -23.27% 6.92% 0.44%
Credit Suisse Group -4.84% -2.93% -0.16%

Dividends

Credit Suisse Group pays an annual dividend of $0.72 per share and has a dividend yield of 4.5%. Royal Bank Scotland PLC (The) does not pay a dividend. Credit Suisse Group pays out -102.9% of its earnings in the form of a dividend.

Summary

Credit Suisse Group beats Royal Bank Scotland PLC (The) on 11 of the 14 factors compared between the two stocks.

Royal Bank Scotland PLC (The) Company Profile

The Royal Bank of Scotland Group plc (RBS) is a banking and financial services company. The Company provides a range of products and services to personal, commercial, corporate and institutional customers, through its subsidiaries, The Royal Bank of Scotland plc and National Westminster Bank Plc (NatWest), as well as through other brands, including Ulster Bank and Coutts. The Company’s segments include Personal & Business Banking (PBB), Commercial & Private Banking (CPB), NatWest Markets (NWM), Capital Resolution, Williams & Glyn (W&G), and Central items & other. The Company’s products and services include banking and risk management, such as payments, insurance and liquidity management; personal lending, including personal loans and credit cards; deposits, such as current accounts and savings accounts; investments, such as portfolio management and unitized funds; commercial lending, including business lending, and capital markets, including rates, currencies and financing.

Credit Suisse Group Company Profile

Credit Suisse Group AG (Credit Suisse) is a financial services company. The Company’s segments include Swiss Universal Bank, International Wealth Management, Asia Pacific, Global Markets, Investment Banking & Capital Markets, Strategic Resolution Unit and Corporate Center. It offers a range of private banking and wealth management solutions to its clients in its Swiss Universal Bank, International Wealth Management and Asia Pacific divisions. It offers a range of investment advice and discretionary asset management services. It offers a range of investment services, including macroeconomic, equity, bond, commodity and foreign-exchange analysis, as well as research on the economy. Its investment advice covers a range of services from portfolio consulting to advising on individual investments. The Company offers its clients portfolio and risk management solutions, including managed investment products.

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