Critical Contrast: ANZ (OTCMKTS:ANZBY) and Royal Bank of Scotland Group (OTCMKTS:RBS)

ANZ (OTCMKTS:ANZBY) and Royal Bank of Scotland Group (NYSE:RBS) are both large-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Institutional and Insider Ownership

0.1% of ANZ shares are held by institutional investors. Comparatively, 0.6% of Royal Bank of Scotland Group shares are held by institutional investors. 0.3% of ANZ shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares ANZ and Royal Bank of Scotland Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ANZ N/A N/A N/A
Royal Bank of Scotland Group 17.89% 6.04% 0.40%

Earnings & Valuation

This table compares ANZ and Royal Bank of Scotland Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ANZ $26.98 billion 1.91 $4.87 billion $1.73 10.32
Royal Bank of Scotland Group $20.84 billion 1.29 $2.79 billion $0.48 9.31

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

Dividends

ANZ pays an annual dividend of $1.10 per share and has a dividend yield of 6.2%. Royal Bank of Scotland Group pays an annual dividend of $0.08 per share and has a dividend yield of 1.8%. ANZ pays out 63.6% of its earnings in the form of a dividend. Royal Bank of Scotland Group pays out 16.7% 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.

Risk and Volatility

ANZ has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Royal Bank of Scotland Group has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for ANZ and Royal Bank of Scotland Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ANZ 1 2 1 0 2.00
Royal Bank of Scotland Group 2 4 3 0 2.11

Summary

Royal Bank of Scotland Group beats ANZ on 8 of the 15 factors compared between the two stocks.

About ANZ

Australia and New Zealand Banking Group Limited provides various banking and financial products and services. The company's Australia division offers retail products and services to consumers through the branch network, mortgage specialists, contact centers, and third party brokers, as well as self-service channels, such as Internet banking, phone banking, ATMs, Website, and digital banking; and banking products and financial services, including asset financing to medium to large commercial customers, agribusiness customers, small business owners, high net worth individuals, and family groups. Its Institutional division provides working capital and liquidity solutions, which include documentary trade, supply chain financing, commodity financing, cash management solutions, deposits, payments, and clearing; loan syndication, specialized 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. The company's New Zealand division offers banking and wealth management services to consumer, and private banking and small business banking customers; and relationship banking and financial solutions to medium to large enterprises, and agricultural businesses. Its Wealth Australia division provides lenders mortgage insurance, share investing, financial planning, and general insurance distribution services. The company's Asia Retail & Pacific division offers general banking and wealth management services to retail customers; and products and services to retail customers, small to medium-sized enterprises, institutional customers, and governments. Australia and New Zealand Banking Group Limited has operations in Australia, the Asia Pacific, Europe, the Americas, and New Zealand. The company was founded in 1835 and is headquartered in Docklands, Australia.

About Royal Bank of Scotland Group

The Royal Bank of Scotland Group plc, together with its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers worldwide. It operates through Personal & Business Banking, Commercial & Private Banking, RBS International, and NatWest Markets segments. The company also offers wealth management, financial planning, investment management, asset finance, and offshore banking; and financing and risk solutions, as well as trading and flow sales services. The Royal Bank of Scotland Group plc was founded in 1727 and is headquartered in Edinburgh, the United Kingdom.

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