BANCO DO BRASIL/S (OTCMKTS:BDORY – Get Rating) and First Merchants (NASDAQ:FRME – Get Rating) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.
Insider and Institutional Ownership
72.4% of First Merchants shares are owned by institutional investors. 1.2% of First Merchants shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
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Profitability
This table compares BANCO DO BRASIL/S and First Merchants' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
| BANCO DO BRASIL/S | 13.00% | 16.44% | 1.23% |
| First Merchants | 32.28% | 11.04% | 1.31% |
Analyst Ratings
This is a breakdown of current ratings and recommmendations for BANCO DO BRASIL/S and First Merchants, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
| BANCO DO BRASIL/S | 0 | 0 | 1 | 0 | 3.00 |
| First Merchants | 0 | 0 | 2 | 1 | 3.33 |
First Merchants has a consensus price target of $47.75, indicating a potential upside of 20.31%. Given First Merchants' stronger consensus rating and higher possible upside, analysts plainly believe First Merchants is more favorable than BANCO DO BRASIL/S.
Dividends
BANCO DO BRASIL/S pays an annual dividend of $0.16 per share and has a dividend yield of 2.0%. First Merchants pays an annual dividend of $1.28 per share and has a dividend yield of 3.2%. BANCO DO BRASIL/S pays out 9.9% of its earnings in the form of a dividend. First Merchants pays out 37.5% 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. First Merchants has increased its dividend for 12 consecutive years. First Merchants is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
BANCO DO BRASIL/S has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, First Merchants has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.
Earnings and Valuation
This table compares BANCO DO BRASIL/S and First Merchants' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
| BANCO DO BRASIL/S | $24.14 billion | 0.96 | $3.65 billion | $1.61 | 5.04 |
| First Merchants | $555.96 million | 4.25 | $205.53 million | $3.41 | 11.64 |
BANCO DO BRASIL/S has higher revenue and earnings than First Merchants. BANCO DO BRASIL/S is trading at a lower price-to-earnings ratio than First Merchants, indicating that it is currently the more affordable of the two stocks.
Summary
First Merchants beats BANCO DO BRASIL/S on 14 of the 18 factors compared between the two stocks.
About BANCO DO BRASIL/S
(Get Rating)
Banco do Brasil S.A. provides banking products and services for individuals, companies, and public sectors in Brazil and internationally. The company's Banking segment offers various products and services, including deposits, loans, and services to retail, wholesale, and public sector markets, as well as to micro-entrepreneurs and the low income population. Its Investments segment engages in the intermediation and distribution of debts in the primary and secondary markets; equity investment activities; and rendering of financial services. The company's Fund Management segment is involved in the purchase, sale, and custody of securities, as well as the management of portfolios, and investment funds and clubs. Its Insurance, Pension and Capitalization segment provides life, property, and automobile insurance products, as well as private pension and capitalization plans. The company's Payment Methods segment is involved in the funding, transmission, processing, and settlement of transactions through electronic means. Its Other segment engages in the provision of credit recovery and consortium administration services; development, manufacturing, leasing, and integration of digital electronic systems and equipment, peripherals, programs, inputs, and computing supplies; intermediation of air tickets; and lodging and organization of events. Banco do Brasil S.A. was founded in 1808 and is headquartered in Brasalia, Brazil.
About First Merchants
(Get Rating)
First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. It accepts time, savings, and demand deposits; and provides consumer, commercial, agri-business, and real estate mortgage loans, as well as public finance. The company also offers personal and corporate trust; brokerage and private wealth management; and letters of credit, repurchase agreements, and other corporate services. It operates 109 banking locations in Indiana, Illinois, Ohio, and Michigan counties. The company also offers its services through electronic and mobile delivery channels. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.
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