Grupo Financiero Santander Serfin (BSMX) versus Merchants Bancorp (MBIN) Critical Contrast

Grupo Financiero Santander Serfin (NYSE: BSMX) and Merchants Bancorp (NASDAQ:MBIN) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, dividends, earnings, profitability and institutional ownership.

Dividends

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Grupo Financiero Santander Serfin pays an annual dividend of $0.40 per share and has a dividend yield of 5.4%. Merchants Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. Grupo Financiero Santander Serfin pays out 58.0% of its earnings in the form of a dividend. Merchants Bancorp pays out 12.2% 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.

Analyst Ratings

This is a summary of current ratings and target prices for Grupo Financiero Santander Serfin and Merchants Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Grupo Financiero Santander Serfin 1 3 1 0 2.00
Merchants Bancorp 0 0 4 0 3.00

Grupo Financiero Santander Serfin currently has a consensus price target of $10.30, indicating a potential upside of 38.81%. Merchants Bancorp has a consensus price target of $21.25, indicating a potential downside of 0.65%. Given Grupo Financiero Santander Serfin’s higher probable upside, analysts plainly believe Grupo Financiero Santander Serfin is more favorable than Merchants Bancorp.

Profitability

This table compares Grupo Financiero Santander Serfin and Merchants Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Grupo Financiero Santander Serfin 16.88% 15.15% 1.43%
Merchants Bancorp N/A N/A N/A

Insider and Institutional Ownership

26.7% of Grupo Financiero Santander Serfin shares are owned by institutional investors. Comparatively, 21.1% of Merchants Bancorp shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Grupo Financiero Santander Serfin and Merchants Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Grupo Financiero Santander Serfin $6.23 billion 0.79 $939.07 million $0.69 10.75
Merchants Bancorp $142.07 million 4.32 $54.68 million $1.97 10.86

Grupo Financiero Santander Serfin has higher revenue and earnings than Merchants Bancorp. Grupo Financiero Santander Serfin is trading at a lower price-to-earnings ratio than Merchants Bancorp, indicating that it is currently the more affordable of the two stocks.

Summary

Grupo Financiero Santander Serfin beats Merchants Bancorp on 8 of the 14 factors compared between the two stocks.

Grupo Financiero Santander Serfin Company Profile

Banco Santander (México) S.A., Institución de Banca Múltiple, Grupo Financiero Santander, together with its subsidiaries, provides banking products and services in Mexico and internationally. The company operates through two segments, Commercial Bank and Global Corporate Bank. It offers long and short-term deposits; savings and current accounts; personal, education, mortgage, and syndicated loans; and acquisition and project finance, financial lease, and structured credit, as well as loans for agribusiness. The company also provides investment funds, term investments, pension funds, and credit and debit cards; life, health, car, home, and fraud insurance services; tax payment services; cash management services, commercial financing, and financial solutions; debt capital market services; and trade, export, and commodity finance. In addition, it offers merger and acquisition services, equity products and services, treasury and trading products, financial consulting services, and asset and capital structuring services; courses, workshops, and lectures related to finance; and administrative, operating, accounting, human resources, and marketing services. The company distributes its products and services through a network of offices and branches, ATMs, telephone assistance centers, Internet, mobile phone applications, sales representatives, and independent intermediaries to individuals, corporate customers, small and medium-sized enterprises, and government institutions. As of December 31, 2015, it operated 1,354 offices and 5,989 ATMs in Mexico. The company was formerly known as Banco Mexicano and changed its name to Banco Santander (México) S.A., Institución de Banca Múltiple, Grupo Financiero Santander in May 2008. The company was founded in 1932 and is based in Mexico City, Mexico. Banco Santander (México) S.A., Institución de Banca Múltiple, Grupo Financiero Santander is a subsidiary of Grupo Financiero Santander México, S.A.B de C.V.

Merchants Bancorp Company Profile

Merchants Bancorp operates as a bank holding company for Merchants Bank of Indiana that provides various banking products and services in the United States. It operates through Multi-family Mortgage Banking, Mortgage Warehousing, and Banking segments. The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities. The Mortgage Warehousing segment funds agency eligible residential loans, including origination, purchase, and sale in the secondary market, as well as commercial loans to non-depository financial institutions. The Banking segment provides a range of financial products and services to consumers and businesses, including various types of deposit products, including checking, savings, and time deposit accounts; commercial, commercial real estate, mortgage, and other consumer loan products; and letters of credit. Merchants Bancorp operates five branches comprising three branches in the Indianapolis, Indiana metropolitan area and two branches in Lynn, Indiana. The company was founded in 1990 and is headquartered in Carmel, Indiana.

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