Critical Contrast: Stellarone (STEL) & The Competition

Stellarone (NYSE:STEL) is one of 26 public companies in the “National commercial banks” industry, but how does it compare to its competitors? We will compare Stellarone to related businesses based on the strength of its valuation, dividends, institutional ownership, analyst recommendations, risk, profitability and earnings.

Analyst Recommendations

This is a summary of recent ratings and price targets for Stellarone and its competitors, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stellarone	0	2	1	0	2.33
Stellarone Competitors	94	655	362	18	2.27

Stellarone currently has a consensus price target of $37.00, indicating a potential downside of 0.66%. As a group, “National commercial banks” companies have a potential upside of 6.85%. Given Stellarone’s competitors higher possible upside, analysts plainly believe Stellarone has less favorable growth aspects than its competitors.

Profitability

This table compares Stellarone and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stellarone	18.80%	7.43%	1.09%
Stellarone Competitors	16.70%	9.92%	0.99%

Dividends

Stellarone pays an annual dividend of $0.60 per share and has a dividend yield of 1.6%. Stellarone pays out 30.3% of its earnings in the form of a dividend. As a group, “National commercial banks” companies pay a dividend yield of 2.5% and pay out 35.4% of their earnings in the form of a dividend. Stellarone has raised its dividend for 1 consecutive years.

Valuation & Earnings

This table compares Stellarone and its competitors gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Stellarone	$423.41 million	$117.61 million	18.81
Stellarone Competitors	$422.44 million	$78.83 million	17.49

Stellarone has higher revenue and earnings than its competitors. Stellarone is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Institutional and Insider Ownership

54.2% of Stellarone shares are owned by institutional investors. Comparatively, 49.5% of shares of all “National commercial banks” companies are owned by institutional investors. 9.9% of Stellarone shares are owned by insiders. Comparatively, 8.4% of shares of all “National commercial banks” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Stellarone has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Stellarone’s competitors have a beta of 0.71, suggesting that their average share price is 29% less volatile than the S&P 500.

Summary

Stellarone beats its competitors on 10 of the 15 factors compared.

About Stellarone

StellarOne Corporation is a bank holding company of StellarOne Bank (the Bank). The Bank is an independent commercial bank holding company. It offers services provided by full-service banks, including individual and commercial demand and time deposit accounts, commercial and consumer loans, residential mortgages, credit card services and deposit services. The Bank, through its commercial banking segment, offers Internet banking access for banking services, mobile banking and online bill payment for both consumers and commercial customers. Lending is focused on individuals and small to middle-market businesses in the local markets of the Bank. The Bank, through its wealth management segment, provides a variety of wealth management and personal trust services. The mortgage banking segment engages primarily in the origination and acquisition of residential mortgages for sale into the secondary market. In January 2014, Union First Market Bankshares Corp acquired StellarOne Corporation.