Cullen/Frost Bankers (NASDAQ: NWBI) and Northwest Bancshares (NASDAQ:NWBI) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, institutional ownership, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

78.7% of Cullen/Frost Bankers shares are owned by institutional investors. Comparatively, 68.6% of Northwest Bancshares shares are owned by institutional investors. 4.6% of Cullen/Frost Bankers shares are owned by company insiders. Comparatively, 2.2% of Northwest Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Cullen/Frost Bankers and Northwest Bancshares, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cullen/Frost Bankers 2 10 3 0 2.07
Northwest Bancshares 0 2 0 0 2.00

Cullen/Frost Bankers currently has a consensus target price of $112.46, indicating a potential downside of 1.09%. Northwest Bancshares has a consensus target price of $17.00, indicating a potential downside of 7.26%. Given Cullen/Frost Bankers’ stronger consensus rating and higher probable upside, analysts plainly believe Cullen/Frost Bankers is more favorable than Northwest Bancshares.

Earnings and Valuation

This table compares Cullen/Frost Bankers and Northwest Bancshares’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cullen/Frost Bankers $1.23 billion 5.91 $364.14 million $5.45 20.86
Northwest Bancshares $469.34 million 4.03 $94.46 million $0.84 21.82

Cullen/Frost Bankers has higher revenue and earnings than Northwest Bancshares. Cullen/Frost Bankers is trading at a lower price-to-earnings ratio than Northwest Bancshares, indicating that it is currently the more affordable of the two stocks.

Dividends

Cullen/Frost Bankers pays an annual dividend of $2.68 per share and has a dividend yield of 2.4%. Northwest Bancshares pays an annual dividend of $0.68 per share and has a dividend yield of 3.7%. Cullen/Frost Bankers pays out 49.2% of its earnings in the form of a dividend. Northwest Bancshares pays out 81.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cullen/Frost Bankers has increased its dividend for 25 consecutive years and Northwest Bancshares has increased its dividend for 2 consecutive years.

Profitability

This table compares Cullen/Frost Bankers and Northwest Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cullen/Frost Bankers 31.38% 13.08% 1.31%
Northwest Bancshares 21.20% 8.06% 1.03%

Risk & Volatility

Cullen/Frost Bankers has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500. Comparatively, Northwest Bancshares has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500.

Summary

Cullen/Frost Bankers beats Northwest Bancshares on 15 of the 17 factors compared between the two stocks.

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. operates as the holding company for Frost Bank that offers commercial and consumer banking services in Texas. The company operates in two segments, Banking and Frost Wealth Advisors. It provides commercial banking services to corporations and other business clients, including financing for industrial and commercial properties, interim construction, equipment, inventories and accounts receivable, and acquisition financing; commercial leasing; and treasury management services. The company also offers consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. Its international banking services comprise accepting deposits, making loans, issuing letter of credits, handling foreign collections, transmitting funds, and dealing in foreign exchange. In addition, the company acts as correspondent for approximately 203 financial institutions; offers trust, investment, agency, and custodial services for individual and corporate clients; provides capital market services consisting of sales and trading, new issue underwriting, money market trading, advisory services, and securities safekeeping and clearance; and supports international business activities. Further, it offers insurance and securities brokerage services; holds securities for investment purposes; and provides loans to qualified borrowers, as well as offers investment management services to Frost-managed mutual funds, institutions, and individuals. The company operates approximately 134 financial centers and approximately 1,300 ATMs in Texas. It serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. Cullen/Frost Bankers, Inc. was founded in 1868 and is headquartered in San Antonio, Texas.

About Northwest Bancshares

Northwest Bancshares, Inc. operates as a bank holding company for Northwest Savings Bank that offers various personal and business banking solutions in the United States. The company offers personal and business deposits, such as checking, savings, money market deposit, term certificate, and individual retirement accounts. Its loan portfolio comprise one-to-four family residential real estate, residential mortgage, short term consumer, multi-family residential and commercial real estate, commercial business, and home equity loans; lines of credit; and consumer loans, including automobile, sales finance, unsecured personal, and credit card loans, as well as loans secured by deposit accounts. In addition, the company offers employee benefit, property, and casualty insurance services; and trust, investment management, and brokerage services. As of December 31, 2017, it operated 172 community-banking locations in central and western Pennsylvania, western New York, and eastern Ohio. Northwest Bancshares, Inc. was founded in 1896 and is headquartered in Warren, Pennsylvania.

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