Bank of America (NYSE:BAC – Get Rating) and City (NASDAQ:CHCO – Get Rating) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitability, analyst recommendations and dividends.
This table compares Bank of America and City’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Bank of America||32.84%||12.55%||0.99%|
Valuation and Earnings
This table compares Bank of America and City’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Bank of America||$93.85 billion||2.71||$31.98 billion||$3.50||9.02|
|City||$235.11 million||5.18||$88.08 million||$5.83||13.95|
Bank of America has higher revenue and earnings than City. Bank of America is trading at a lower price-to-earnings ratio than City, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
70.5% of Bank of America shares are held by institutional investors. Comparatively, 64.1% of City shares are held by institutional investors. 0.3% of Bank of America shares are held by insiders. Comparatively, 2.6% of City shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Bank of America pays an annual dividend of $0.84 per share and has a dividend yield of 2.7%. City pays an annual dividend of $2.40 per share and has a dividend yield of 3.0%. Bank of America pays out 24.0% of its earnings in the form of a dividend. City pays out 41.2% 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. Bank of America has raised its dividend for 1 consecutive years and City has raised its dividend for 9 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of current recommendations and price targets for Bank of America and City, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Bank of America||0||7||12||0||2.63|
Bank of America currently has a consensus target price of $49.38, suggesting a potential upside of 56.47%. Given Bank of America’s higher probable upside, equities analysts clearly believe Bank of America is more favorable than City.
Volatility & Risk
Bank of America has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, City has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.
City beats Bank of America on 9 of the 16 factors compared between the two stocks.
About Bank of America (Get Rating)
Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. Its Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, noninterest-and interest-bearing checking accounts, and investment accounts and products; and credit and debit cards, residential mortgages, and home equity loans, as well as direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The company’s Global Wealth & Investment Management segment offers investment management, brokerage, banking, and trust and retirement products and services; and wealth management solutions, as well as customized solutions, including specialty asset management services. Its Global Banking segment provides lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, and short-term investing options and merchant services; working capital management solutions; and debt and equity underwriting and distribution, and merger-related and other advisory services. The company’s Global Markets segment offers market-making, financing, securities clearing, settlement, and custody services, as well as risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. As of December 31, 2021, it served approximately 67 million consumer and small business clients with approximately 4,200 retail financial centers; approximately 16,000 ATMs; and digital banking platforms with approximately 41 million active users. The company was founded in 1784 and is based in Charlotte, North Carolina.
About City (Get Rating)
City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. The company operates through a network of 94 branches and 905 full-time equivalent associates in West Virginia, Virginia, Kentucky, and Ohio. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.
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