Finance, Inc. (JD) vs. Itau Unibanco Holding S.A. (ITUB): Breaking Down the Two Hottest Stocks, Inc. (NASDAQ:JD) shares are down more than -48.21% this year and recently decreased -2.54% or -$0.56 to settle at $21.45. Itau Unibanco Holding S.A. (NYSE:ITUB), on the other hand, is up 11.68% year to date as of 12/04/2018. It currently trades at $9.14 and has returned 1.33% during the past week., Inc. (NASDAQ:JD) and Itau Unibanco Holding S.A. (NYSE:ITUB) are the two most active stocks based on recent trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.


Companies that can increase earnings at a high compound rate over time are attractive to investors. Analysts expect JD to grow earnings at a 4.79% annual rate over the next 5 years. Comparatively, ITUB is expected to grow at a 9.30% annual rate. All else equal, ITUB’s higher growth rate would imply a greater potential for capital appreciation.

Profitability and Returns

Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return., Inc. (JD) has an EBITDA margin of 1.46%. This suggests that JD underlying business is more profitable JD’s ROI is -1.30% while ITUB has a ROI of 6.20%. The interpretation is that ITUB’s business generates a higher return on investment than JD’s.

Cash Flow

The amount of free cash flow available to investors is ultimately what determines the value of a stock. JD’s free cash flow (“FCF”) per share for the trailing twelve months was +0.87. Comparatively, ITUB’s free cash flow per share was +0.84. On a percent-of-sales basis, JD’s free cash flow was 1.88% while ITUB converted 13.84% of its revenues into cash flow. This means that, for a given level of sales, ITUB is able to generate more free cash flow for investors.

Liquidity and Financial Risk

JD’s debt-to-equity ratio is 0.30 versus a D/E of 4.21 for ITUB. ITUB is therefore the more solvent of the two companies, and has lower financial risk.


JD trades at a forward P/E of 37.37, a P/B of 3.37, and a P/S of 0.48, compared to a forward P/E of 11.67, a P/B of 2.63, and a P/S of 2.45 for ITUB. JD is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

Analyst Price Targets and Opinions

A cheap stock is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. JD is currently priced at a -28.74% to its one-year price target of 30.10. Comparatively, ITUB is 2.35% relative to its price target of 8.93. This suggests that JD is the better investment over the next year.

Risk and Volatility

Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. JD has a beta of 1.39 and ITUB’s beta is 1.21. ITUB’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. JD has a short ratio of 2.27 compared to a short interest of 0.53 for ITUB. This implies that the market is currently less bearish on the outlook for ITUB.


Itau Unibanco Holding S.A. (NYSE:ITUB) beats, Inc. (NASDAQ:JD) on a total of 7 of the 14 factors compared between the two stocks. ITUB is more profitable, generates a higher return on investment and has a higher cash conversion rate. In terms of valuation, ITUB is the cheaper of the two stocks on an earnings and book value, Finally, ITUB has better sentiment signals based on short interest.

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