Analyzing Australia and New Zealand Banking Group (OTCMKTS:ANZBY) and Commonwealth Bank of Australia (OTCMKTS:CMWAY)

Commonwealth Bank of Australia (OTCMKTS:CMWAY) and Australia and New Zealand Banking Group (OTCMKTS:ANZBY) are both large-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.

Analyst Ratings

This is a breakdown of current ratings and target prices for Commonwealth Bank of Australia and Australia and New Zealand Banking Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Commonwealth Bank of Australia 0 0 0 0 N/A
Australia and New Zealand Banking Group 0 2 1 0 2.33

Dividends

Commonwealth Bank of Australia pays an annual dividend of $1.35 per share and has a dividend yield of 2.0%. Australia and New Zealand Banking Group pays an annual dividend of $0.51 per share and has a dividend yield of 2.7%. Commonwealth Bank of Australia pays out 50.4% of its earnings in the form of a dividend. Australia and New Zealand Banking Group pays out 25.8% 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. Australia and New Zealand Banking Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Commonwealth Bank of Australia has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, Australia and New Zealand Banking Group has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500.

Insider & Institutional Ownership

0.1% of Commonwealth Bank of Australia shares are held by institutional investors. 0.3% of Australia and New Zealand Banking Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Commonwealth Bank of Australia and Australia and New Zealand Banking Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Commonwealth Bank of Australia N/A N/A N/A
Australia and New Zealand Banking Group N/A N/A N/A

Earnings and Valuation

This table compares Commonwealth Bank of Australia and Australia and New Zealand Banking Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Commonwealth Bank of Australia $23.09 billion 5.13 $6.47 billion $2.68 24.96
Australia and New Zealand Banking Group $31.91 billion 1.68 $4.19 billion $1.98 9.41

Commonwealth Bank of Australia has higher earnings, but lower revenue than Australia and New Zealand Banking Group. Australia and New Zealand Banking Group is trading at a lower price-to-earnings ratio than Commonwealth Bank of Australia, indicating that it is currently the more affordable of the two stocks.

Summary

Australia and New Zealand Banking Group beats Commonwealth Bank of Australia on 6 of the 11 factors compared between the two stocks.

Commonwealth Bank of Australia Company Profile

Commonwealth Bank of Australia provides integrated financial services in Australia, New Zealand, and internationally. It offers retail, premium, business, and institutional banking; and funds management, insurance, and share-broking products and services. The company operates through five segments: Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, New Zealand, and International Financial Services and Corporate Centre. It offers transaction and savings accounts, term deposits, personal and business loans, credit cards, insurance products, international payment, and private banking services, as well as home, car, and personal loans. The company also provides advisory services for high net worth individuals; equities trading and margin lending services; debt capital, transaction banking, working capital, and risk management services; and merchant, international and foreign exchange, and risk management services. It operates through 1,118 branches and 3,542 ATMs. The company was founded in 1911 and is based in Sydney, Australia.

Australia and New Zealand Banking Group Company Profile

Australia and New Zealand Banking Group Limited provides various banking and financial products and services in Australia, New Zealand, the Asia Pacific, Europe, and the United States. Its Australia Retail and Commercial division offers various products and services to consumer customers through the branch network, mortgage specialists, contact centers, self-service channels, and third-party brokers, as well as financial planning services. It also provides asset financing for medium to large commercial customers, agribusiness customers, small business owners, high net worth individuals, and family groups. The company's Institutional division offers documentary trade, supply chain and commodity financing, cash management solutions, deposits, payments, and clearing services; loan syndication, loan structuring and execution, project and export finance, debt structuring and acquisition finance, and corporate advisory services, as well as loan products; and risk management services on foreign exchange, interest rates, credit, commodities, and debt capital markets. It serves governments, and global institutional and corporate customers. The company's New Zealand division provides banking and wealth management services to consumer, and private banking and small business banking customers through its Internet and app-based digital solutions, network of branches, mortgage specialists, relationship managers, and contact centers; and traditional relationship banking and financial solutions for medium to large enterprises, agricultural business segments, and government and government-related entities. Its Pacific division offers various products and services that include retail products, and traditional relationship banking and financial solutions. This division serves retail customers, small to medium-sized enterprises, institutional customers, and governments. Australia and New Zealand Banking Group Limited was founded in 1835 and is headquartered in Melbourne, Australia.

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