Critical Survey: Shinhan Financial Group (NYSE:SHG) and Heartland BancCorp (OTCMKTS:HLAN)

Shinhan Financial Group (NYSE:SHG) and Heartland BancCorp (OTCMKTS:HLAN) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Dividends

Shinhan Financial Group pays an annual dividend of $1.22 per share and has a dividend yield of 2.8%. Heartland BancCorp pays an annual dividend of $3.03 per share and has a dividend yield of 2.1%. Shinhan Financial Group pays out 20.1% of its earnings in the form of a dividend. Heartland BancCorp pays out 30.5% 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. Shinhan Financial Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

7.8% of Shinhan Financial Group shares are held by institutional investors. Comparatively, 7.5% of Heartland BancCorp shares are held by institutional investors. 1.0% of Shinhan Financial Group shares are held by insiders. Comparatively, 22.7% of Heartland BancCorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations for Shinhan Financial Group and Heartland BancCorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shinhan Financial Group	0	0	1	0	3.00
Heartland BancCorp	0	1	1	0	2.50

Heartland BancCorp has a consensus target price of $122.50, indicating a potential downside of 14.91%. Given Heartland BancCorp’s higher probable upside, analysts clearly believe Heartland BancCorp is more favorable than Shinhan Financial Group.

Risk & Volatility

Shinhan Financial Group has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Heartland BancCorp has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.

Profitability

This table compares Shinhan Financial Group and Heartland BancCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shinhan Financial Group	12.23%	7.16%	0.58%
Heartland BancCorp	17.89%	N/A	N/A

Valuation and Earnings

This table compares Shinhan Financial Group and Heartland BancCorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shinhan Financial Group	$25.42 billion	0.87	$3.49 billion	$6.07	7.18
Heartland BancCorp	$104.83 million	2.77	$19.52 million	$9.94	14.48

Shinhan Financial Group has higher revenue and earnings than Heartland BancCorp. Shinhan Financial Group is trading at a lower price-to-earnings ratio than Heartland BancCorp, indicating that it is currently the more affordable of the two stocks.

Summary

Shinhan Financial Group beats Heartland BancCorp on 9 of the 15 factors compared between the two stocks.

About Shinhan Financial Group

Shinhan Financial Group Co., Ltd. provides financial products and services in South Korea and internationally. The company operates through six segments: Banking, Credit Card, Securities, Insurance, Credit, and Others. It offers retail banking services, including demand, savings, and fixed deposit-taking; checking accounts; mortgage and home equity, and retail lending; electronic banking and automatic teller machines (ATM); and bill paying, payroll and check-cashing, currency exchange, and wire fund transfer services. The company also provides corporate banking services, such as investment banking, real estate financing, overseas real estate and development project financing, infrastructure and structured financing, equity/venture investments, mergers and acquisitions consulting; securitization and derivatives services comprising securities and derivative products, and foreign exchange trading; business expansion financing and consulting services; and working capital loans and facilities loans. In addition, it is involved in treasury and investment activities in international capital markets consisting of foreign currency-denominated securities trading, foreign exchange trading and services, trade-related financial services, international factoring services, and foreign banking operations. Further, the company offers real estate trust, investment advisory, venture business investment, life and non-life insurance, trust account management, securities brokerage, and asset management services, as well as leasing and equipment financing, savings banking, loan collection and credit reporting, collective investment administration, private equity investment, and financial system development services. Additionally, it provides transaction history inquiries and fund transfers, opening letters of credit, trade finance, payment and collection management, sales and acquisition settlement, business-to-business settlement, sweeping, pooling, ERP interface, host-to-host banking, SWIFT SCORE, and cash and liquidity management service. Shinhan Financial Group Co., Ltd. was founded in 1982 and is headquartered in Seoul, South Korea.

About Heartland BancCorp

Heartland BancCorp operates as the bank holding company for Heartland Bank that provides various banking and financial services to individual and corporate customers. The company offers personal and business checking and savings accounts. It also provides various lending solutions comprising agricultural loans, commercial and business lending, home and personal loans, and title services. In addition, the company offers online banking, treasury management, credit and debit card, and mobile wallet services. Further, it provides education planning, insurance, wealth management, and retirement planning services. Heartland BancCorp was founded in 1911 and is based in Whitehall, Ohio.