Capital Bank Financial (NASDAQ: CBF) and Lloyds Banking Group (NYSE:LYG) are both mid-cap financials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Profitability

This table compares Capital Bank Financial and Lloyds Banking Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capital Bank Financial 25.58% 7.69% 1.02%
Lloyds Banking Group 19.22% 18.38% 1.10%

Dividends

Capital Bank Financial pays an annual dividend of $0.48 per share and has a dividend yield of 1.1%. Lloyds Banking Group pays an annual dividend of $0.14 per share and has a dividend yield of 3.7%. Capital Bank Financial pays out 30.6% of its earnings in the form of a dividend. Lloyds Banking Group pays out 60.9% 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. Lloyds Banking Group has increased its dividend for 2 consecutive years. Lloyds Banking Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

64.4% of Capital Bank Financial shares are held by institutional investors. Comparatively, 2.1% of Lloyds Banking Group shares are held by institutional investors. 12.4% of Capital Bank Financial shares are held by insiders. Comparatively, 0.0% of Lloyds Banking Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Capital Bank Financial has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, Lloyds Banking Group has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Valuation & Earnings

This table compares Capital Bank Financial and Lloyds Banking Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Capital Bank Financial $341.60 million 6.36 $58.16 million $1.57 26.59
Lloyds Banking Group $23.73 billion 2.87 $2.80 billion $0.23 16.44

Lloyds Banking Group has higher revenue and earnings than Capital Bank Financial. Lloyds Banking Group is trading at a lower price-to-earnings ratio than Capital Bank Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Capital Bank Financial and Lloyds Banking Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital Bank Financial 0 2 1 0 2.33
Lloyds Banking Group 6 1 3 0 1.70

Capital Bank Financial currently has a consensus target price of $44.00, suggesting a potential upside of 5.39%. Given Capital Bank Financial’s stronger consensus rating and higher probable upside, equities analysts clearly believe Capital Bank Financial is more favorable than Lloyds Banking Group.

Summary

Capital Bank Financial beats Lloyds Banking Group on 9 of the 17 factors compared between the two stocks.

Capital Bank Financial Company Profile

Capital Bank Financial Corp. is a bank holding company whose business is conducted through Capital Bank Corporation (the Bank). The Company, through its branches, offers a range of commercial and consumer loans and deposits, as well as ancillary financial services. It offers a range of commercial loan products, including owner occupied and non-owner occupied commercial real estate; construction; working capital loans and lines of credit; demand and time loans, and equipment, inventory and accounts receivable financing. In addition to business demand, savings and money market accounts, it also provides cash management services and deposit products. It offers various services to its customers, including checking, savings and money market accounts, certificates of deposit and debit and credit cards. It offers consumer loan products, including home equity loans and lines of credit; second lien mortgages; new and used auto loans; new and used boat loans, and overdraft protection.

Lloyds Banking Group Company Profile

Lloyds Banking Group plc is a provider of financial services to individual and business customers in the United Kingdom. The Company’s main business activities are retail and commercial banking, general insurance, and long-term savings, protection and investment. The Company’s segments are Retail, Commercial Banking, Consumer Finance, Insurance and Other. The Retail segment offers a range of financial service products, including current accounts, savings and mortgages. The Commercial Banking segment offers a range of products and services, such as lending, transactional banking, working capital management, risk management and debt capital markets services. The Consumer Finance segment offers consumer lending products, including motor finance, credit cards, and unsecured personal loans. The Insurance segment provides a range of protection, pension and investment products. Its brands include Lloyds Bank, Halifax, Bank of Scotland, Scottish Widows, Colleys, Lex Autolease and AMC.

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