Bank of America (NYSE:BAC) vs. Moelis & Company (NYSE:MC) Critical Analysis

Bank of America (NYSE:BAC) and Moelis & Company (NYSE:MC) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, earnings, profitability, valuation, risk, institutional ownership and dividends.

Volatility & Risk

Bank of America has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Moelis & Company has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500.

Earnings and Valuation

This table compares Bank of America and Moelis & Company”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of America	$192.43 billion	1.84	$27.13 billion	$3.42	13.94
Moelis & Company	$1.19 billion	4.89	$136.02 million	$2.54	29.31

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

Profitability

This table compares Bank of America and Moelis & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of America	14.81%	10.25%	0.84%
Moelis & Company	14.31%	42.72%	17.12%

Insider and Institutional Ownership

70.7% of Bank of America shares are held by institutional investors. Comparatively, 91.5% of Moelis & Company shares are held by institutional investors. 0.3% of Bank of America shares are held by company insiders. Comparatively, 6.4% of Moelis & Company shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Bank of America pays an annual dividend of $1.04 per share and has a dividend yield of 2.2%. Moelis & Company pays an annual dividend of $2.60 per share and has a dividend yield of 3.5%. Bank of America pays out 30.4% of its earnings in the form of a dividend. Moelis & Company pays out 102.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bank of America has raised its dividend for 11 consecutive years and Moelis & Company has raised its dividend for 1 consecutive years.

Analyst Ratings

This is a summary of current ratings and target prices for Bank of America and Moelis & Company, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of America	0	5	17	0	2.77
Moelis & Company	1	4	2	0	2.14

Bank of America presently has a consensus price target of $50.1250, indicating a potential upside of 5.14%. Moelis & Company has a consensus price target of $66.00, indicating a potential downside of 11.35%. Given Bank of America’s stronger consensus rating and higher probable upside, equities analysts clearly believe Bank of America is more favorable than Moelis & Company.

Summary

Bank of America beats Moelis & Company on 9 of the 17 factors compared between the two stocks.

About Bank of America

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates in four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, non-interest and interest-bearing checking accounts, and investment accounts and products; credit and debit cards; residential mortgages, and home equity loans; and direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The GWIM segment provides investment management, brokerage, banking, and trust and retirement products and services; wealth management solutions; and customized solutions, including specialty asset management services. The Global Banking segment offers lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, short-term investing options, and merchant services; working capital management solutions; debt and equity underwriting and distribution, and merger-related and other advisory services; and fixed-income and equity research, and certain market-based services. The Global Markets segment provides market-making, financing, securities clearing, settlement, and custody services; securities and derivative products; and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1784 and is based in Charlotte, North Carolina.

About Moelis & Company

Moelis & Co. operates as a holding company. It engages in the provision of financial advisory, capital raising and asset management services to a client base including corporations, governments, sovereign wealth funds and financial sponsors. The firm focuses on clients including large public multinational corporations, middle market private companies, financial sponsors, entrepreneurs and governments. The company was founded by Kenneth David Moelis, Navid Mahmoodzadegan, Jeffrey Raich and Elizabeth Ann Crain in July 2007 and is headquartered in New York, NY.