Financial Review: Mitsubishi UFJ Financial Group (MUFG) vs. First Republic Bank (FRC)

Mitsubishi UFJ Financial Group (NYSE:MUFG) and First Republic Bank (NYSE:FRC) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Earnings and Valuation

This table compares Mitsubishi UFJ Financial Group and First Republic Bank’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mitsubishi UFJ Financial Group $54.79 billion 1.46 $11.05 billion $0.71 8.45
First Republic Bank $2.91 billion 4.99 $757.66 million $4.31 21.39

Mitsubishi UFJ Financial Group has higher revenue and earnings than First Republic Bank. Mitsubishi UFJ Financial Group is trading at a lower price-to-earnings ratio than First Republic Bank, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

1.1% of Mitsubishi UFJ Financial Group shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Mitsubishi UFJ Financial Group has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500. Comparatively, First Republic Bank has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Dividends

Mitsubishi UFJ Financial Group pays an annual dividend of $0.13 per share and has a dividend yield of 2.2%. First Republic Bank pays an annual dividend of $0.72 per share and has a dividend yield of 0.8%. Mitsubishi UFJ Financial Group pays out 18.3% of its earnings in the form of a dividend. First Republic Bank pays out 16.7% 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. First Republic Bank has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Mitsubishi UFJ Financial Group and First Republic Bank, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mitsubishi UFJ Financial Group 0 0 2 0 3.00
First Republic Bank 0 9 5 0 2.36

First Republic Bank has a consensus price target of $102.46, indicating a potential upside of 11.13%. Given First Republic Bank’s higher probable upside, analysts clearly believe First Republic Bank is more favorable than Mitsubishi UFJ Financial Group.

Profitability

This table compares Mitsubishi UFJ Financial Group and First Republic Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mitsubishi UFJ Financial Group 16.35% 6.56% 0.36%
First Republic Bank 24.05% 11.47% 0.89%

Summary

First Republic Bank beats Mitsubishi UFJ Financial Group on 10 of the 16 factors compared between the two stocks.

About Mitsubishi UFJ Financial Group

Mitsubishi UFJ Financial Group, Inc., a bank holding company, provides financial services in Japan and internationally. Its Retail Banking Business Group segment offers a range of products and services, such as bank deposits, loans, asset management and administration services, investment products, and settlement services. This segment also provides annuity, single premium whole life, flat-rate premium whole life, medical, cancer, and nursing-care insurance products; testamentary trust services; housing loans; Internet banking services; and credit cards. The company's Corporate Banking Business Group segment provides loans and fund management, and remittance and foreign exchange services; securities businesses, syndicated loans, and structured finance; investment banking services; and transaction and trust banking services. Its Trust Assets Business Group segment offers asset management and administration services for products, such as pension trusts and security trusts. This segment also provides a range of services to corporate and other pension funds comprising pension fund management and administration, advice on pension schemes, and payment of benefits to scheme members. The company's Global Business Group segment offers project finance, export credit agency, and financing through asset-backed commercial papers; and investment banking services, such as debt and equity issuance and M&A advisory services, as well as consumer finance, investment, asset management, and other financial products and services to individuals, large corporations, financial institutions, and sovereign and multinational organizations. Its Global Markets Business Group segment offers financing, hedging, and investing solutions to retail, corporate, institutional, and governmental customers; and asset and liability management services. Mitsubishi UFJ Financial Group, Inc. was founded in 1880 and is headquartered in Tokyo, Japan.

About First Republic Bank

First Republic Bank, together with its subsidiaries, provides private banking, private business banking, real estate lending, and wealth management services to clients in metropolitan areas of the United States. It operates through two segments, Commercial Banking and Wealth Management. The company offers deposit products, such as checking, money market checking, savings, and passbook deposits, as well as certificates of deposit. It also provides a range of lending products that comprise residential mortgage loans, home equity lines of credit, multifamily loans, commercial real estate loans, residential construction loans, personal loans, business loans, and smaller loans and lines of credit to businesses and individuals. The company's loans are secured by single family residences, multifamily buildings, and commercial real estate properties. In addition, it provides wealth management services, which include various investment strategies and products, trust and custody services, full service and online brokerage, financial and estate planning, and access to alternative investments, as well as investing, insurance, and foreign exchange services. As of December 31, 2017, the company offered its services through 76 offices, including 70 preferred banking licensed deposit-taking offices in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, and San Diego, California; Portland, Oregon; Boston, Massachusetts; Palm Beach, Florida; Greenwich, Connecticut; and New York, New York, as well as 6 offices that provided lending, wealth management, and trust services. First Republic Bank was founded in 1985 and is headquartered in San Francisco, California.

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