Head-To-Head Contrast: Community Bank System (CBU) and Shinhan Financial Group (SHG)

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

Risk & Volatility

Community Bank System has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Shinhan Financial Group has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Community Bank System 33.19% 10.03% 1.51%
Shinhan Financial Group 17.23% 8.32% 0.65%

Institutional & Insider Ownership

69.8% of Community Bank System shares are owned by institutional investors. Comparatively, 2.5% of Shinhan Financial Group shares are owned by institutional investors. 2.3% of Community Bank System shares are owned by company insiders. Comparatively, 1.0% of Shinhan Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Community Bank System pays an annual dividend of $1.36 per share and has a dividend yield of 2.1%. Shinhan Financial Group pays an annual dividend of $1.03 per share and has a dividend yield of 2.7%. Community Bank System pays out 48.7% of its earnings in the form of a dividend. Shinhan Financial Group pays out 9.0% 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. Community Bank System has raised its dividend for 7 consecutive years and Shinhan Financial Group has raised its dividend for 2 consecutive years. Shinhan Financial Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Community Bank System and Shinhan Financial Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Community Bank System $531.88 million 6.28 $150.71 million $2.79 23.42
Shinhan Financial Group $15.37 billion 1.16 $2.58 billion $11.46 3.28

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

Analyst Recommendations

This is a summary of recent recommendations for Community Bank System and Shinhan Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Community Bank System 0 6 0 0 2.00
Shinhan Financial Group 0 0 0 0 N/A

Community Bank System presently has a consensus target price of $57.75, indicating a potential downside of 11.60%. Given Community Bank System’s higher probable upside, analysts clearly believe Community Bank System is more favorable than Shinhan Financial Group.

Summary

Community Bank System beats Shinhan Financial Group on 9 of the 15 factors compared between the two stocks.

About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and financial services to retail, commercial, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as checking, savings, and money market accounts, as well as time deposits. It also provides loans comprising consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory services; and asset management services to individuals, corporations, corporate pension and profit sharing plans, and foundations, as well as operates as a full-service insurance agency that offers personal and commercial property insurance, and other risk management products and services. Further, it offers contribution plan administration services, actuarial and benefits consulting services, and collective investment fund administration and institutional trust services, as well as employee benefit trust, retirement plan administration, VEBA/HRA, and health and welfare consulting services. Additionally, the company provides wealth management, higher educational planning, fiduciary, risk management, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and advisory products, as well as transfer agency and master recordkeeping services. As of December 31, 2017, it had 225 branches in Upstate New York as well as Northeastern Pennsylvania, Vermont, and Western Massachusetts. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through five segments: Banking, Credit Cards, Securities, Life Insurance, and Others. It offers retail banking services, including mortgage and home equity, and retail lending; demand, savings, and fixed deposit-taking; checking accounts; 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, and securitization; derivatives services comprising securities and derivative products, and foreign exchange trading; 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 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. As of December 31, 2017, it operated a network of 865 service centers; 6,076 ATMs; 9 cash dispensers; and 35 digital kiosks. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.

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