Critical Comparison: National Bank of Canada (OTCMKTS:NTIOF) vs. Intercorp Financial Services (NYSE:IFS)

National Bank of Canada (OTCMKTS:NTIOF) and Intercorp Financial Services (NYSE:IFS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Profitability

This table compares National Bank of Canada and Intercorp Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bank of Canada	19.10%	17.29%	0.83%
Intercorp Financial Services	14.94%	8.97%	0.99%

Valuation & Earnings

This table compares National Bank of Canada and Intercorp Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bank of Canada	$17.32 billion	1.86	$2.47 billion	$7.14	13.27
Intercorp Financial Services	$6.18 billion	0.51	$286.85 million	$2.22	12.35

National Bank of Canada has higher revenue and earnings than Intercorp Financial Services. Intercorp Financial Services is trading at a lower price-to-earnings ratio than National Bank of Canada, indicating that it is currently the more affordable of the two stocks.

Dividends

National Bank of Canada pays an annual dividend of $3.26 per share and has a dividend yield of 3.4%. Intercorp Financial Services pays an annual dividend of $0.95 per share and has a dividend yield of 3.5%. National Bank of Canada pays out 45.7% of its earnings in the form of a dividend. Intercorp Financial Services pays out 42.8% 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. Intercorp Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

National Bank of Canada has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, Intercorp Financial Services has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Institutional and Insider Ownership

0.1% of National Bank of Canada shares are owned by institutional investors. 0.3% of National Bank of Canada shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for National Bank of Canada and Intercorp Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bank of Canada	0	1	0	0	2.00
Intercorp Financial Services	0	0	2	0	3.00

Intercorp Financial Services has a consensus price target of $32.45, indicating a potential upside of 18.39%. Given Intercorp Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe Intercorp Financial Services is more favorable than National Bank of Canada.

Summary

National Bank of Canada beats Intercorp Financial Services on 9 of the 16 factors compared between the two stocks.

About National Bank of Canada

National Bank of Canada provides financial services to individuals, businesses, institutional clients, and governments in Canada and internationally. It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International. The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, and savings and investment solutions; various insurance products; and commercial banking services, such as credit, and deposit, investment solutions, international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complimentary services. The Wealth Management segment provides full-service brokerage, private banking, direct brokerage, investment solutions, administrative and trade execution, transaction products, and trust and estate services. The Financial Markets segment offers corporate banking, advisory, and capital markets services; and project financing, debt, and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing. The U.S. Specialty Finance and International segment provides specialty finance products; and personal and commercial banking in Cambodia. National Bank of Canada was founded in 1859 and is headquartered in Montreal, Canada.

About Intercorp Financial Services

Intercorp Financial Services Inc., together with its subsidiaries, offers banking, insurance, wealth management, and payment services for retail and commercial clients in Peru. The company provides loans, credit facilities, deposits, and current accounts; life annuity products with single-premium payment and conventional life insurance products, as well as other retail insurance products; and brokerage and investment management services. It engages in the development, management, operation, and processing of credit and debit cards; facilitation of payments and services through commercial stores; and installation and maintenance of infrastructure for transactions through electronic commerce modality and networks of payment methods processors. The company was incorporated in 1897 and is based in Lima, Peru. Intercorp Financial Services Inc. operates as a subsidiary of Intercorp Perú Ltd.