Western Alliance Bancorporation (NYSE:WAL) and National Bank of Canada (OTCMKTS:NTIOF) Critical Review

National Bank of Canada (OTCMKTS:NTIOF) and Western Alliance Bancorporation (NYSE:WAL) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, profitability and dividends.

Profitability

This table compares National Bank of Canada and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bank of Canada	17.22%	16.67%	0.85%
Western Alliance Bancorporation	17.34%	13.50%	1.07%

Dividends

National Bank of Canada pays an annual dividend of $3.81 per share and has a dividend yield of 2.5%. Western Alliance Bancorporation pays an annual dividend of $1.84 per share and has a dividend yield of 2.4%. National Bank of Canada pays out 44.1% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 20.3% 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. Western Alliance Bancorporation has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of recent recommendations and price targets for National Bank of Canada and Western Alliance Bancorporation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bank of Canada	0	5	3	0	2.38
Western Alliance Bancorporation	0	5	11	0	2.69

Western Alliance Bancorporation has a consensus target price of $92.56, indicating a potential upside of 22.29%. Given Western Alliance Bancorporation’s stronger consensus rating and higher possible upside, analysts clearly believe Western Alliance Bancorporation is more favorable than National Bank of Canada.

Risk and Volatility

National Bank of Canada has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.

Insider & Institutional Ownership

0.1% of National Bank of Canada shares are owned by institutional investors. Comparatively, 79.2% of Western Alliance Bancorporation shares are owned by institutional investors. 0.3% of National Bank of Canada shares are owned by insiders. Comparatively, 2.8% of Western Alliance Bancorporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares National Bank of Canada and Western Alliance Bancorporation”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bank of Canada	$21.96 billion	2.66	$2.87 billion	$8.63	17.76
Western Alliance Bancorporation	$3.94 billion	2.07	$969.00 million	$9.05	8.36

National Bank of Canada has higher revenue and earnings than Western Alliance Bancorporation. Western Alliance Bancorporation is trading at a lower price-to-earnings ratio than National Bank of Canada, indicating that it is currently the more affordable of the two stocks.

Summary

Western Alliance Bancorporation beats National Bank of Canada on 11 of the 17 factors compared between the two stocks.

About National Bank of Canada

National Bank of Canada provides financial services to individuals, businesses, institutional clients, and governments in Canada and internationally. It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International. The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, and savings and investment solutions; various insurance products; and commercial banking services, such as credit, and deposit, investment solutions, international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complimentary services. The Wealth Management segment provides full-service brokerage, private banking, direct brokerage, investment solutions, administrative and trade execution, transaction products, and trust and estate services. The Financial Markets segment offers corporate banking, advisory, and capital markets services; and project financing, debt, and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing. The U.S. Specialty Finance and International segment provides specialty finance products; and personal and commercial banking in Cambodia. National Bank of Canada was founded in 1859 and is headquartered in Montreal, Canada.

About Western Alliance Bancorporation

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.