Head-To-Head Analysis: HDFC Bank (HDB) and First Foundation (FFWM)

HDFC Bank (NYSE: HDB) and First Foundation (NASDAQ:FFWM) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Volatility & Risk

HDFC Bank has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, First Foundation has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Profitability

This table compares HDFC Bank and First Foundation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HDFC Bank 18.00% 15.22% 1.74%
First Foundation 19.62% 10.32% 0.82%

Earnings & Valuation

This table compares HDFC Bank and First Foundation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HDFC Bank $12.17 billion 6.67 $2.17 billion $2.66 35.71
First Foundation $135.20 million 5.21 $23.30 million $0.92 20.32

HDFC Bank has higher revenue and earnings than First Foundation. First Foundation is trading at a lower price-to-earnings ratio than HDFC Bank, indicating that it is currently the more affordable of the two stocks.

Dividends

HDFC Bank pays an annual dividend of $0.49 per share and has a dividend yield of 0.5%. First Foundation does not pay a dividend. HDFC Bank pays out 18.4% of its earnings in the form of a dividend. First Foundation has raised its dividend for 4 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for HDFC Bank and First Foundation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HDFC Bank 0 1 2 0 2.67
First Foundation 0 1 2 0 2.67

First Foundation has a consensus target price of $19.50, indicating a potential upside of 4.33%. Given First Foundation’s higher possible upside, analysts plainly believe First Foundation is more favorable than HDFC Bank.

Institutional and Insider Ownership

17.5% of HDFC Bank shares are owned by institutional investors. Comparatively, 51.0% of First Foundation shares are owned by institutional investors. 1.0% of HDFC Bank shares are owned by company insiders. Comparatively, 18.5% of First Foundation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

HDFC Bank beats First Foundation on 9 of the 15 factors compared between the two stocks.

About HDFC Bank

HDFC Bank Limited (the Bank) is a holding company. The Bank offers a range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side. It also offers financial services. The Bank’s segments include Treasury, Retail banking, Wholesale banking and Other banking business. The Treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money market borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and derivative contracts. The Retail Banking segment serves retail customers through a branch network and other delivery channels, as well as through alternative delivery channels. The Bank provides its corporate and institutional clients a range of commercial and transactional banking products. The Other banking business segment includes income from para banking activities.

About First Foundation

First Foundation Inc. is a financial services holding company that provides a platform of personalized financial services to high net-worth individuals and their families, family businesses and other affiliated organizations. The Company conducts its operations through its subsidiaries, First Foundation Advisors (FFA) and First Foundation Bank (FFB), and First Foundation Insurance Services (FFIS), a subsidiary of FFB. The Company’s segments include Banking, Investment Management and Wealth Planning (Wealth Management), and Other. The Banking segment includes the operations of FFB and FFIS, and Wealth Management segment includes the operations of FFA. The Company’s integrated platform provides investment management, wealth planning, consulting, trust, banking products and services, life insurance services and property and casualty insurance services to meet the financial needs of its clients.

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