Comparing Northern Trust (NTRS) & Banco Bradesco (BBD)

Northern Trust (NASDAQ:NTRS) and Banco Bradesco (NYSE:BBD) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Risk and Volatility

Northern Trust has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Banco Bradesco has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Institutional & Insider Ownership

79.1% of Northern Trust shares are held by institutional investors. Comparatively, 3.3% of Banco Bradesco shares are held by institutional investors. 1.0% of Northern Trust shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Northern Trust and Banco Bradesco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northern Trust 23.28% 15.75% 1.11%
Banco Bradesco 14.27% 17.38% 1.59%

Dividends

Northern Trust pays an annual dividend of $2.20 per share and has a dividend yield of 2.5%. Banco Bradesco pays an annual dividend of $0.05 per share and has a dividend yield of 0.5%. Northern Trust pays out 45.5% of its earnings in the form of a dividend. Banco Bradesco pays out 5.6% 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. Northern Trust has increased its dividend for 6 consecutive years and Banco Bradesco has increased its dividend for 4 consecutive years. Northern Trust is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Northern Trust and Banco Bradesco, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northern Trust 0 6 9 1 2.69
Banco Bradesco 0 1 4 0 2.80

Northern Trust presently has a consensus target price of $117.00, indicating a potential upside of 31.56%. Given Northern Trust’s higher possible upside, analysts plainly believe Northern Trust is more favorable than Banco Bradesco.

Valuation & Earnings

This table compares Northern Trust and Banco Bradesco’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Northern Trust $5.72 billion 3.44 $1.20 billion $4.83 18.41
Banco Bradesco $46.46 billion 1.39 $4.59 billion $0.89 10.85

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

Summary

Northern Trust beats Banco Bradesco on 11 of the 18 factors compared between the two stocks.

Northern Trust Company Profile

Northern Trust Corporation, a financial holding company, provides asset servicing, fund administration, asset management, fiduciary, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates through Corporate & Institutional Services (C&IS) and Wealth Management segments. The C&IS segment offers asset servicing and related services, including global custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment provides services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses. The company also provides asset management services, such as active, passive, and engineered equity; active and passive fixed income; cash management; alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay services and other risk management services. Northern Trust Corporation was founded in 1889 and is based in Chicago, Illinois.

Banco Bradesco Company Profile

Banco Bradesco S.A. provides banking and financial products and services to individuals, enterprises, and corporations and institutions. It operates through two segments, Banking; and Insurance, Pension Plans and Capitalization Bond. The company accepts checking and savings accounts, time deposits, interbank deposits from financial institutions, and accounts for salary purposes. Its loan products include personal and payroll-deductible, vehicle financing, and overdraft loans; housing loans; government-funded long-term loans; short-term loans, working capital loans, guaranteed checking accounts and corporate overdraft loans, financing for purchase and sale of goods and services, and investment lines for acquisition of assets and machinery, as well as discounting trade receivables, promissory notes, checks, credit card and supplier receivables, etc.; rural credit; and import and export financing. The company also offers credit cards; cash management solutions; services related to capital markets and investment banking activities, including project finance, mergers and acquisitions, structured operations, fixed income, and variable income; and life and personal accident, health, automobile, property/casualty, and liability insurance products; reinsurance products; pension plans; and capitalization bonds. In addition, it provides public authority, leasing, asset management and administration, intermediation and trading, international banking, foreign exchange, consortia, automatic teller machines, telephone, and Internet Banking services. The company operates through a network of 4,749 branches; 4,827 service centers and electronic in-company service centers; 35,590 active ATMs; 21,259 ATMs under the Banco24Horas brand; and 3 branches internationally. Banco Bradesco S.A. was founded in 1943 and is headquartered in Osasco, Brazil.

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