Burford Capital (NYSE:BUR – Get Free Report) and China Merchants Bank (OTCMKTS:CIHKY – Get Free Report) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.
Dividends
Burford Capital pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. China Merchants Bank pays an annual dividend of $1.19 per share and has a dividend yield of 4.1%. Burford Capital pays out 10.3% of its earnings in the form of a dividend. China Merchants Bank pays out 30.6% 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.
Profitability
This table compares Burford Capital and China Merchants Bank’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Burford Capital | 34.81% | 8.07% | 4.28% |
| China Merchants Bank | 30.16% | 13.27% | 1.27% |
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Burford Capital | $1.09 billion | 3.10 | $610.52 million | $1.16 | 13.26 |
| China Merchants Bank | $70.40 billion | 2.06 | $20.71 billion | $3.89 | 7.41 |
China Merchants Bank has higher revenue and earnings than Burford Capital. China Merchants Bank is trading at a lower price-to-earnings ratio than Burford Capital, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Burford Capital has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, China Merchants Bank has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500.
Analyst Ratings
This is a summary of recent ratings and target prices for Burford Capital and China Merchants Bank, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Burford Capital | 0 | 0 | 3 | 0 | 3.00 |
| China Merchants Bank | 0 | 0 | 0 | 0 | 0.00 |
Burford Capital currently has a consensus price target of $19.50, indicating a potential upside of 26.82%. Given Burford Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Burford Capital is more favorable than China Merchants Bank.
Summary
Burford Capital beats China Merchants Bank on 9 of the 14 factors compared between the two stocks.
About Burford Capital
Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision. The Capital Provision segment provides capital to the legal industry or in connection with legal matters directly and through investment in private funds; legal risk management services; lower risk legal finance business focusing on pre-settlement litigation matters with lower risk and lower expected returns; post-settlement finance; and complex strategies in which it acts as a principal and acquires assets that are mispriced. The Asset Management and Other Services segment provides services to the legal industry, including litigation insurance. Burford Capital Limited was incorporated in 2009 and is based in Saint Peter Port, Guernsey.
About China Merchants Bank
China Merchants Bank Co., Ltd., together with its subsidiaries, provides various banking products and services. It operates through Wholesale Finance Business, Retail Finance Business, and Other Business segments. The company offers current, demand, time, call, savings, notice, and renminbi accounts. Its loan products include personal commercial real estate, consumption, housing, and car loans; loans to finance for studying abroad; micro-business loans; mortgage loans for equipment; joint guarantee, special guarantee, and housing mortgage loan; bank acceptance, discount, liquid capital, and fixed asset loans; and loans for vessels. The company also offers credit cards; insurance products; open-ended funds; discount and guarantees for commercial bills, redemption of commercial bills, and guaranteed discount for commercial acceptance bills; and financial consultation, debt financing underwriting, merger and acquisition financing, and equity financing and enterprise listing services. In addition, it provides forfeiting and risk participation, escrow, cross-border RMB clearing, and interbank services; and risk and financial management, cross-border RMB and oversea financing, international factoring and settlement, and trade finance services. Further, the company offers financial leasing and guarantee, investment and wealth management, forex option and gold trading, forex express trading, international, offshore and private banking, custody, pension, and electronic banking services. The company also operates in Hong Kong, New York, London, Singapore, Luxembourg, Sydney, and Taipei. China Merchants Bank Co., Ltd. was founded in 1987 and is headquartered in Shenzhen, China.
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