Critical Review: HomeStreet (NASDAQ:HMST) and Deutsche Bank Aktiengesellschaft (NYSE:DB)

HomeStreet (NASDAQ:HMST) and Deutsche Bank Aktiengesellschaft (NYSE:DB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.

Risk & Volatility

HomeStreet has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500. Comparatively, Deutsche Bank Aktiengesellschaft has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.

Profitability

This table compares HomeStreet and Deutsche Bank Aktiengesellschaft’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HomeStreet	-40.30%	-4.23%	-0.23%
Deutsche Bank Aktiengesellschaft	4.66%	3.90%	0.22%

Institutional & Insider Ownership

74.7% of HomeStreet shares are owned by institutional investors. Comparatively, 27.9% of Deutsche Bank Aktiengesellschaft shares are owned by institutional investors. 4.6% of HomeStreet shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for HomeStreet and Deutsche Bank Aktiengesellschaft, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HomeStreet	0	2	2	0	2.50
Deutsche Bank Aktiengesellschaft	0	1	3	1	3.00

HomeStreet currently has a consensus target price of $14.25, indicating a potential upside of 25.55%. Given HomeStreet’s higher probable upside, equities analysts clearly believe HomeStreet is more favorable than Deutsche Bank Aktiengesellschaft.

Dividends

HomeStreet pays an annual dividend of $0.40 per share and has a dividend yield of 3.5%. Deutsche Bank Aktiengesellschaft pays an annual dividend of $0.21 per share and has a dividend yield of 1.0%. HomeStreet pays out -5.2% of its earnings in the form of a dividend. Deutsche Bank Aktiengesellschaft pays out 15.2% 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. HomeStreet is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares HomeStreet and Deutsche Bank Aktiengesellschaft”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HomeStreet	$45.83 million	4.69	-$144.34 million	($7.66)	-1.48
Deutsche Bank Aktiengesellschaft	$30.05 billion	1.35	$3.64 billion	$1.39	14.70

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

Summary

Deutsche Bank Aktiengesellschaft beats HomeStreet on 10 of the 17 factors compared between the two stocks.

About HomeStreet

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank that provides commercial, mortgage, and consumer/retail banking services in the Western United States. The company offers personal and business checking, savings, interest-bearing negotiable order of withdrawal, and money market accounts, as well as certificates of deposit; credit cards; insurance; and treasury management services. Its loan products include commercial real estate (CRE), multifamily, construction and land development, owner occupied CRE and commercial business loans; and single family, home equity, and other loans. In addition, the company offers online, mobile, and telephone banking. It serves small and medium sized businesses, real estate investors, professional firms, and individuals. The company operates through branches and ATMs. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was incorporated in 1921 and is headquartered in Seattle, Washington.

About Deutsche Bank Aktiengesellschaft

Deutsche Bank Aktiengesellschaft, a stock corporation, provides corporate and investment banking, and asset management products and services to private individuals, corporate entities, and institutional clients in Germany, the United Kingdom, rest of Europe, the Middle East, Africa, the Americas, and the Asia-Pacific. It operates through Corporate Bank, Investment Bank, Private Bank, and Asset Management segments. The Corporate Bank segment offers cash management, trade finance and lending, trust and agency, and securities services, as well as risk management solutions. The Investment Bank segment provides debt origination, merger and acquisitions, foreign exchange, and equity advisory and origination platform services. The Private Bank segment offers payment and account services, and credit and deposit products, as well as investment advice products, such as environmental, social, and governance products. This segment also provides banking, wealth management, other financial, and postal and parcel services; and supports in planning, managing and investing wealth, financing personal and business interests, and servicing institutional and corporate needs. The Asset Management segment offers investment solutions, such as alternative investments, which include real estate, infrastructure, liquid real assets, and sustainable investments; and various other services, including insurance and pension solutions, asset liability management, portfolio management solutions, and asset allocation advisory to individuals and institutions. Deutsche Bank Aktiengesellschaft was founded in 1870 and is headquartered in Frankfurt am Main, Germany.