Prosperity Bancshares (NYSE:PB) versus Wintrust Financial (NASDAQ:WTFC) Financial Survey

Wintrust Financial (NASDAQ:WTFC) and Prosperity Bancshares (NYSE:PB) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitability, earnings and institutional ownership.

Earnings & Valuation

This table compares Wintrust Financial and Prosperity Bancshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wintrust Financial	$4.23 billion	2.46	$823.84 million	$12.45	12.38
Prosperity Bancshares	$1.33 billion	5.52	$542.84 million	$5.77	12.63

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

Analyst Recommendations

This is a summary of recent ratings for Wintrust Financial and Prosperity Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wintrust Financial	0	4	9	0	2.69
Prosperity Bancshares	1	8	5	0	2.29

Wintrust Financial presently has a consensus price target of $177.77, indicating a potential upside of 15.34%. Prosperity Bancshares has a consensus price target of $78.36, indicating a potential upside of 7.57%. Given Wintrust Financial’s stronger consensus rating and higher possible upside, research analysts plainly believe Wintrust Financial is more favorable than Prosperity Bancshares.

Dividends

Wintrust Financial pays an annual dividend of $2.20 per share and has a dividend yield of 1.4%. Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.3%. Wintrust Financial pays out 17.7% of its earnings in the form of a dividend. Prosperity Bancshares pays out 41.6% 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. Wintrust Financial has increased its dividend for 12 consecutive years and Prosperity Bancshares has increased its dividend for 27 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Wintrust Financial has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Profitability

This table compares Wintrust Financial and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wintrust Financial	20.72%	13.37%	1.28%
Prosperity Bancshares	29.95%	7.39%	1.43%

Insider & Institutional Ownership

93.5% of Wintrust Financial shares are owned by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are owned by institutional investors. 1.2% of Wintrust Financial shares are owned by company insiders. Comparatively, 4.0% of Prosperity Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Wintrust Financial beats Prosperity Bancshares on 10 of the 17 factors compared between the two stocks.

About Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance, and Wealth Management. The Community Banking segment offers non-interest bearing deposits, non-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.