Analyzing City (NASDAQ:CHCO) & Regions Financial (NYSE:RF)

City (NASDAQ:CHCO) and Regions Financial (NYSE:RF) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and price targets for City and Regions Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	5	1	0	2.17
Regions Financial	3	8	7	0	2.22

City currently has a consensus target price of $134.25, indicating a potential upside of 8.00%. Regions Financial has a consensus target price of $30.47, indicating a potential upside of 8.83%. Given Regions Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Regions Financial is more favorable than City.

Valuation & Earnings

This table compares City and Regions Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$398.98 million	4.40	$130.49 million	$9.08	13.69
Regions Financial	$7.62 billion	3.14	$2.16 billion	$2.40	11.67

Regions Financial has higher revenue and earnings than City. Regions Financial is trading at a lower price-to-earnings ratio than City, indicating that it is currently the more affordable of the two stocks.

Dividends

City pays an annual dividend of $3.48 per share and has a dividend yield of 2.8%. Regions Financial pays an annual dividend of $1.06 per share and has a dividend yield of 3.8%. City pays out 38.3% of its earnings in the form of a dividend. Regions Financial pays out 44.2% 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. City has raised its dividend for 6 consecutive years and Regions Financial has raised its dividend for 12 consecutive years. Regions Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares City and Regions Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City	32.72%	16.58%	1.96%
Regions Financial	23.13%	12.70%	1.40%

Volatility and Risk

City has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Regions Financial has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Institutional & Insider Ownership

72.4% of City shares are held by institutional investors. Comparatively, 79.4% of Regions Financial shares are held by institutional investors. 1.8% of City shares are held by insiders. Comparatively, 0.3% of Regions Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Regions Financial beats City on 9 of the 17 factors compared between the two stocks.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

About Regions Financial

Regions Financial Corporation, a financial holding company, provides banking and bank-related services to individual and corporate customers. It operates through three segments: Corporate Bank, Consumer Bank, and Wealth Management. The Corporate Bank segment offers commercial banking services, such as commercial and industrial, commercial real estate, and investor real estate lending; equipment lease financing; deposit products; and securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition, and other advisory services. It serves corporate, middle market, and commercial real estate developers and investors. The Consumer Bank segment provides consumer banking products and services related to residential first mortgages, home equity lines and loans, consumer credit cards, and other consumer loans, as well as deposits. The Wealth Management segment offers credit related products, and retirement and savings solutions; and trust and investment management, asset management, and estate planning services to individuals, businesses, governmental institutions, and non-profit entities. It also provides investment and insurance products; low-income housing tax credit corporate fund syndication services; and other specialty financing services. The company was founded in 1971 and is headquartered in Birmingham, Alabama.