Merchants Bancorp (NASDAQ:MBIN) and Itaú Unibanco (NYSE:ITUB) Head-To-Head Analysis

Merchants Bancorp (NASDAQ:MBIN) and Itaú Unibanco (NYSE:ITUB) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Insider & Institutional Ownership

24.6% of Merchants Bancorp shares are owned by institutional investors. 39.7% of Merchants Bancorp shares are owned by company insiders. Comparatively, 0.6% of Itaú Unibanco shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Merchants Bancorp and Itaú Unibanco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merchants Bancorp	22.08%	22.86%	1.76%
Itaú Unibanco	12.25%	19.46%	1.47%

Dividends

Merchants Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Itaú Unibanco pays an annual dividend of $0.02 per share and has a dividend yield of 0.4%. Merchants Bancorp pays out 6.3% of its earnings in the form of a dividend. Itaú Unibanco pays out 2.8% 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.

Earnings & Valuation

This table compares Merchants Bancorp and Itaú Unibanco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merchants Bancorp	$666.97 million	2.23	$320.39 million	$6.31	5.13
Itaú Unibanco	$158.57 billion	0.38	$7.62 billion	$0.71	7.87

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

Risk & Volatility

Merchants Bancorp has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Itaú Unibanco has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Merchants Bancorp and Itaú Unibanco, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merchants Bancorp	0	1	2	0	2.67
Itaú Unibanco	0	0	4	1	3.20

Merchants Bancorp presently has a consensus target price of $48.83, suggesting a potential upside of 50.77%. Itaú Unibanco has a consensus target price of $6.27, suggesting a potential upside of 12.31%. Given Merchants Bancorp’s higher possible upside, equities analysts clearly believe Merchants Bancorp is more favorable than Itaú Unibanco.

Summary

Merchants Bancorp beats Itaú Unibanco on 10 of the 17 factors compared between the two stocks.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.

About Itaú Unibanco

Itaú Unibanco Holding S.A. offers a range of financial products and services to individuals and corporate customers in Brazil and internationally. The company operates through three segments: Retail Banking, Wholesale Banking, and Activities with the Market + Corporation. It offers current account; loans; credit and debit cards; investment and commercial banking services; real estate lending services; financing and investment services; economic, financial and brokerage advisory; and leasing and foreign exchange services. The company also provides property and casualty insurance products covering loss, damage, or liabilities for assets or persons, as well as life insurance products covering death and personal accident. It serves retail customers, account and non-account holders, individuals and legal entities, high income clients, microenterprises, and small companies, as well as middle-market companies and high net worth clients. 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. The company was incorporated in 1924 and is headquartered in São Paulo, Brazil. Itaú Unibanco Holding S.A. operates as a subsidiary of IUPAR – Itaú Unibanco Participações S.A.