People’s United Financial (NASDAQ: PBCT) and LegacyTexas Financial Group (NASDAQ:LTXB) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.
Risk & Volatility
People’s United Financial has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, LegacyTexas Financial Group has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500.
This is a summary of current recommendations and price targets for People’s United Financial and LegacyTexas Financial Group, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|People’s United Financial||1||5||1||0||2.00|
|LegacyTexas Financial Group||0||4||4||0||2.50|
People’s United Financial presently has a consensus target price of $19.93, suggesting a potential upside of 6.74%. LegacyTexas Financial Group has a consensus target price of $47.80, suggesting a potential upside of 13.16%. Given LegacyTexas Financial Group’s stronger consensus rating and higher probable upside, analysts plainly believe LegacyTexas Financial Group is more favorable than People’s United Financial.
People’s United Financial pays an annual dividend of $0.70 per share and has a dividend yield of 3.7%. LegacyTexas Financial Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.5%. People’s United Financial pays out 67.3% of its earnings in the form of a dividend. LegacyTexas Financial Group pays out 29.4% 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. People’s United Financial has raised its dividend for 11 consecutive years. People’s United Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares People’s United Financial and LegacyTexas Financial Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|People’s United Financial||$1.66 billion||3.92||$337.20 million||$1.04||17.95|
|LegacyTexas Financial Group||$410.44 million||4.97||$89.49 million||$2.18||19.38|
People’s United Financial has higher revenue and earnings than LegacyTexas Financial Group. People’s United Financial is trading at a lower price-to-earnings ratio than LegacyTexas Financial Group, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
77.1% of People’s United Financial shares are owned by institutional investors. Comparatively, 85.4% of LegacyTexas Financial Group shares are owned by institutional investors. 2.5% of People’s United Financial shares are owned by insiders. Comparatively, 3.2% of LegacyTexas Financial Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This table compares People’s United Financial and LegacyTexas Financial Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|People’s United Financial||21.64%||7.16%||0.90%|
|LegacyTexas Financial Group||23.15%||11.46%||1.22%|
LegacyTexas Financial Group beats People’s United Financial on 13 of the 17 factors compared between the two stocks.
About People’s United Financial
People's United Financial, Inc. operates as the bank holding company for People's United Bank, National Association that provides commercial banking, retail banking, and wealth management services to individual, corporate, and municipal customers. The company operates in two segments, Commercial Banking and Retail Banking. The Commercial Banking segment offers commercial real estate lending, commercial and industrial lending, and commercial deposit gathering services. This segment also provides equipment financing; cash management, correspondent banking, and municipal banking services; and institutional trust, corporate trust, private banking, and insurance services. The Retail Banking segment offers consumer lending, including residential mortgage and home equity lending; and consumer deposit gathering services. This segment also provides brokerage, financial advisory, investment management, life insurance, and non-institutional trust services. In addition, the company offers online banking, investment trading, and telephone banking services. It operates through a network of 403 branches, including 147 full-service stop and shop supermarket branches located in Connecticut, southeastern New York, Massachusetts, Vermont, Maine, and New Hampshire, as well as 598 ATMs. People's United Financial, Inc. was founded in 1842 and is headquartered in Bridgeport, Connecticut.
About LegacyTexas Financial Group
LegacyTexas Financial Group, Inc. operates as the holding company for LegacyTexas Bank that provides various banking products and services in the United States. Its deposit products include interest-bearing and non-interest-bearing demand accounts, savings, money market, certificates of deposit, and individual retirement accounts. The company's lending products comprise commercial and consumer real estate loans; secured and unsecured commercial and industrial loans; permanent loans secured by first and second mortgages on one- to four-family residences; construction and land loans; and secured and unsecured consumer loans, including new and used automobile loans, recreational vehicle loans, and loans secured by savings deposits. It also provides insurance and title services. As of January 23, 2018, the company had 3 administrative offices, 44 full-service branches, and 1 commercial loan production office located in Houston, Texas, as well as a Warehouse Purchase Program office located in Littleton, Colorado. The company was formerly known as ViewPoint Financial Group, Inc. and changed its name to LegacyTexas Financial Group, Inc. in January 2015. LegacyTexas Financial Group, Inc. is headquartered in Plano, Texas.
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