Contrasting HSBC (NYSE:HSBC) & VersaBank (NASDAQ:VBNK)
by Michael Walen · The Markets DailyVersaBank (NASDAQ:VBNK – Get Free Report) and HSBC (NYSE:HSBC – Get Free Report) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, dividends, profitability, valuation, analyst recommendations and institutional ownership.
Dividends
VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. HSBC pays an annual dividend of $1.98 per share and has a dividend yield of 2.1%. VersaBank pays out 10.8% of its earnings in the form of a dividend. HSBC pays out 32.7% 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.
Earnings and Valuation
This table compares VersaBank and HSBC”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| VersaBank | $217.14 million | 2.44 | $20.32 million | $0.65 | 25.38 |
| HSBC | $131.35 billion | 2.44 | $23.98 billion | $6.05 | 15.40 |
HSBC has higher revenue and earnings than VersaBank. HSBC is trading at a lower price-to-earnings ratio than VersaBank, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares VersaBank and HSBC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| VersaBank | 9.33% | 7.02% | 0.69% |
| HSBC | 16.07% | 13.21% | 0.83% |
Insider & Institutional Ownership
56.9% of VersaBank shares are owned by institutional investors. Comparatively, 1.5% of HSBC shares are owned by institutional investors. 5.3% of VersaBank shares are owned by insiders. Comparatively, 0.0% of HSBC shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Risk and Volatility
VersaBank has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, HSBC has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations for VersaBank and HSBC, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| VersaBank | 0 | 3 | 1 | 0 | 2.25 |
| HSBC | 0 | 4 | 6 | 1 | 2.73 |
VersaBank presently has a consensus price target of $13.00, indicating a potential downside of 21.21%. HSBC has a consensus price target of $63.00, indicating a potential downside of 32.37%. Given VersaBank’s higher possible upside, equities analysts plainly believe VersaBank is more favorable than HSBC.
Summary
HSBC beats VersaBank on 10 of the 17 factors compared between the two stocks.
About VersaBank
VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.
About HSBC
HSBC Holdings plc provides banking and financial services worldwide. The company operates through Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets segments. The Wealth and Personal Banking segment offers retail banking and wealth products, including current and savings accounts, mortgages and personal loans, credit and debit cards, and local and international payment services; and wealth management services comprising insurance and investment products, global asset management services, investment management, and private wealth solutions. This segment serves personal banking and high net worth individuals. The Commercial Banking segment provides credit and lending, treasury management, payment, cash management, commercial insurance, and investment services; commercial cards; international trade and receivables finance services; foreign exchange products; capital raising services on debt and equity markets; and advisory services. It serves small and medium sized enterprises, mid-market enterprises, and corporates. The Global Banking and Markets segment offers financing, advisory, and transaction services; and credit, rates, foreign exchange, equities, money markets, and securities services; and engages in principal investment activities. It serves government, corporate and institutional clients, and private investors. HSBC Holdings plc was founded in 1865 and is headquartered in London, the United Kingdom.