Critical Review: NU (NYSE:NU) and Shinhan Financial Group (NYSE:SHG)

NU (NYSE:NU) and Shinhan Financial Group (NYSE:SHG) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.

Risk and Volatility

NU has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, Shinhan Financial Group has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Valuation & Earnings

This table compares NU and Shinhan 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
NU	$15.77 billion	3.68	$2.87 billion	$0.65	18.41
Shinhan Financial Group	$23.83 billion	1.34	$3.48 billion	$9.21	7.29

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

Insider & Institutional Ownership

84.0% of NU shares are held by institutional investors. Comparatively, 7.8% of Shinhan Financial Group shares are held by institutional investors. 1.2% of NU shares are held by company insiders. Comparatively, 1.0% of Shinhan Financial Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares NU and Shinhan Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NU	18.20%	30.91%	4.80%
Shinhan Financial Group	20.07%	11.02%	0.86%

Analyst Ratings

This is a summary of recent ratings for NU and Shinhan Financial Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NU	1	4	10	0	2.60
Shinhan Financial Group	0	1	1	0	2.50

NU currently has a consensus target price of $17.08, indicating a potential upside of 42.76%. Given NU’s stronger consensus rating and higher probable upside, research analysts plainly believe NU is more favorable than Shinhan Financial Group.

Summary

NU beats Shinhan Financial Group on 10 of the 14 factors compared between the two stocks.

About NU

Nu Holdings Ltd. is a holding company, which engages in the provision of digital banking services. The company was founded by David Vélez Osorno, Cristina Helena Zingaretti Junqueira, and Adam Edward Wible on February 26, 2016 and is headquartered in George Town, Cayman Islands.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; business expansion financing and consulting services; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers real estate trust, investment advisory, venture business investment, life and non-life insurance, trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. Additionally, it provides transaction history inquiries and fund transfers, opening letters of credit, trade finance, payment and collection management, sales and acquisition settlement, business-to-business settlement, sweeping, pooling, ERP interface, host-to-host banking, SWIFT SCORE, and cash and liquidity management service. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.