M&T Bank (NYSE:MTB) & Prosperity Bancshares (NYSE:PB) Critical Comparison

Prosperity Bancshares (NYSE:PB) and M&T Bank (NYSE:MTB) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.

Risk and Volatility

Prosperity Bancshares has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, M&T Bank has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Valuation and Earnings

This table compares Prosperity Bancshares and M&T Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prosperity Bancshares	$1.33 billion	5.09	$542.84 million	$5.77	11.65
M&T Bank	$13.23 billion	2.40	$2.85 billion	$18.94	11.59

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

Institutional and Insider Ownership

80.7% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 84.7% of M&T Bank shares are held by institutional investors. 4.0% of Prosperity Bancshares shares are held by company insiders. Comparatively, 0.4% of M&T Bank shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.6%. M&T Bank pays an annual dividend of $6.00 per share and has a dividend yield of 2.7%. Prosperity Bancshares pays out 41.6% of its earnings in the form of a dividend. M&T Bank pays out 31.7% 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. Prosperity Bancshares has raised 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.

Analyst Ratings

This is a breakdown of current recommendations for Prosperity Bancshares and M&T Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prosperity Bancshares	2	7	5	0	2.21
M&T Bank	1	13	8	0	2.32

Prosperity Bancshares presently has a consensus target price of $78.18, indicating a potential upside of 16.27%. M&T Bank has a consensus target price of $255.07, indicating a potential upside of 16.18%. Given Prosperity Bancshares’ higher probable upside, analysts plainly believe Prosperity Bancshares is more favorable than M&T Bank.

Profitability

This table compares Prosperity Bancshares and M&T Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prosperity Bancshares	29.95%	7.39%	1.43%
M&T Bank	22.72%	11.80%	1.42%

Summary

Prosperity Bancshares beats M&T Bank on 9 of the 17 factors compared between the two stocks.

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.

About M&T Bank

M&T Bank Corp. operates as a bank holding company, which engages in the provision of retail and commercial banking, trust, wealth management, and investment services. It operates through the following segments: Commercial Bank, Retail Bank, Institutional Services and Wealth Management, and All Other. The Commercial Bank segment offers a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets served by the company. The Retail Bank segment refers to the services to consumers and small businesses through the company’s branch network and several other delivery channels such as telephone banking, internet banking, and ATMs. The Institutional Services and Wealth Management segment relates to helping high net worth individuals, institutions, and families grow, preserve, and transfer wealth. The All Other segment reflects other activities of the company that are not directly attributable to the reported segments. The company was founded on August 30, 1856 and is headquartered in Buffalo, NY.