China Merchants Bank (OTCMKTS:CIHKY – Get Free Report) and Independent Bank (NASDAQ:INDB – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.
Profitability
This table compares China Merchants Bank and Independent Bank’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| China Merchants Bank | 32.69% | 12.45% | 1.23% |
| Independent Bank | 24.27% | 9.61% | 1.36% |
Valuation and Earnings
This table compares China Merchants Bank and Independent Bank”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| China Merchants Bank | $65.04 billion | 2.58 | $20.89 billion | $4.15 | 8.01 |
| Independent Bank | $1.17 billion | 3.39 | $205.12 million | $6.75 | 12.40 |
China Merchants Bank has higher revenue and earnings than Independent Bank. China Merchants Bank is trading at a lower price-to-earnings ratio than Independent Bank, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
83.4% of Independent Bank shares are held by institutional investors. 1.6% of Independent Bank shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Volatility & Risk
China Merchants Bank has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500. Comparatively, Independent Bank has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.
Dividends
China Merchants Bank pays an annual dividend of $1.18 per share and has a dividend yield of 3.5%. Independent Bank pays an annual dividend of $2.56 per share and has a dividend yield of 3.1%. China Merchants Bank pays out 28.4% of its earnings in the form of a dividend. Independent Bank pays out 37.9% 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. Independent Bank has increased its dividend for 15 consecutive years. China Merchants Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a breakdown of current ratings and target prices for China Merchants Bank and Independent Bank, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| China Merchants Bank | 0 | 1 | 0 | 0 | 2.00 |
| Independent Bank | 1 | 0 | 4 | 2 | 3.00 |
Independent Bank has a consensus price target of $91.86, suggesting a potential upside of 9.75%. Given Independent Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Independent Bank is more favorable than China Merchants Bank.
Summary
Independent Bank beats China Merchants Bank on 12 of the 18 factors compared between the two stocks.
About China Merchants Bank
China Merchants Bank Co., Ltd., together with its subsidiaries, provides various banking products and services. It operates through Wholesale Finance Business, Retail Finance Business, and Other Business segments. The company offers current, demand, time, call, savings, notice, and renminbi accounts. Its loan products include personal commercial real estate, consumption, housing, and car loans; loans to finance for studying abroad; micro-business loans; mortgage loans for equipment; joint guarantee, special guarantee, and housing mortgage loan; bank acceptance, discount, liquid capital, and fixed asset loans; and loans for vessels. The company also offers credit cards; insurance products; open-ended funds; discount and guarantees for commercial bills, redemption of commercial bills, and guaranteed discount for commercial acceptance bills; and financial consultation, debt financing underwriting, merger and acquisition financing, and equity financing and enterprise listing services. In addition, it provides forfeiting and risk participation, escrow, cross-border RMB clearing, and interbank services; and risk and financial management, cross-border RMB and oversea financing, international factoring and settlement, and trade finance services. Further, the company offers financial leasing and guarantee, investment and wealth management, forex option and gold trading, forex express trading, international, offshore and private banking, custody, pension, and electronic banking services. The company also operates in Hong Kong, New York, London, Singapore, Luxembourg, Sydney, and Taipei. China Merchants Bank Co., Ltd. was founded in 1987 and is headquartered in Shenzhen, China.
About Independent Bank
Independent Bank Corp. operates as the bank holding company for Rockland Trust Company that provides commercial banking products and services to individuals and small-to-medium sized businesses in the United States. The company provides interest checking, money market, and savings accounts, as well as demand deposits and time certificates of deposit. It offers commercial real estate and construction, commercial and industrial, small business, secured and unsecured commercial, and consumer real estate loans; term loans and revolving/nonrevolving lines of credit; overdraft protection and letters of credit; and residential mortgages and home equity loans and lines. In addition, the company provides cash management services, such as ACH transaction processing, positive pay, and remote deposit services; investment management and trust services to individuals, institutions, small businesses, and charitable institutions; mobile, online, and telephone banking; estate settlement, financial planning, tax services, and other services; automated teller machines; debit and credit cards; and mutual fund and unit investment trust shares, third party model portfolios, general securities, fixed and variable annuities, and life insurance products, as well as advisory platforms. Further, it invests in low-income housing tax credit projects; holds, maintains, and disposes foreclosed properties; and operates as an investment advisor. Independent Bank Corp. was founded in 1907 and is headquartered in Rockland, Massachusetts.
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