Lloyds Banking Group (NYSE:LYG) & First Financial Bankshares (NASDAQ:FFIN) Critical Analysis

First Financial Bankshares (NASDAQ:FFIN) and Lloyds Banking Group (NYSE:LYG) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for First Financial Bankshares and Lloyds Banking Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Bankshares	0	4	1	1	2.50
Lloyds Banking Group	0	4	8	0	2.67

First Financial Bankshares presently has a consensus price target of $35.80, indicating a potential upside of 7.64%. Given First Financial Bankshares’ higher probable upside, analysts clearly believe First Financial Bankshares is more favorable than Lloyds Banking Group.

Earnings & Valuation

This table compares First Financial Bankshares and Lloyds Banking Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Bankshares	$833.20 million	5.72	$253.58 million	$1.87	17.79
Lloyds Banking Group	$25.61 billion	3.34	$6.14 billion	$0.43	13.73

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

Institutional & Insider Ownership

69.8% of First Financial Bankshares shares are owned by institutional investors. Comparatively, 2.1% of Lloyds Banking Group shares are owned by institutional investors. 3.8% of First Financial Bankshares shares are owned by company insiders. Comparatively, 0.0% of Lloyds Banking Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

First Financial Bankshares pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. Lloyds Banking Group pays an annual dividend of $0.16 per share and has a dividend yield of 2.7%. First Financial Bankshares pays out 47.1% of its earnings in the form of a dividend. Lloyds Banking Group pays out 37.2% 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. First Financial Bankshares has raised its dividend for 15 consecutive years. Lloyds Banking Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

First Financial Bankshares has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Lloyds Banking Group has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Financial Bankshares	31.03%	14.00%	1.76%
Lloyds Banking Group	24.97%	10.94%	0.54%

Summary

First Financial Bankshares beats Lloyds Banking Group on 11 of the 18 factors compared between the two stocks.

About First Financial Bankshares

First Financial Bankshares, Inc., through its subsidiaries, provides commercial banking products and services in Texas. The company offers checking, savings and time deposits; automated teller machines, drive-in, and night deposit services; safe deposit facilities, remote deposit capture, internet banking, mobile banking, payroll cards, funds transfer, and performing other customary commercial banking services; securities brokerage services; and trust and wealth management services, including wealth management, estates administration, oil and gas management, testamentary trusts, revocable and irrevocable trusts, and agency accounts. It also provides commercial and industrial, municipal, agricultural, construction and development, farm, residential, and consumer auto and non-auto, as well as non-owner occupied and owner occupied commercial real estate loans. In addition, the company offers advisory and specialized services related to asset management, investing, purchasing, advertising, public relations, and technology services. First Financial Bankshares, Inc. was founded in 1890 and is headquartered in Abilene, Texas.

About Lloyds Banking Group

Lloyds Banking Group plc, together with its subsidiaries, provides a range of banking and financial services in the United Kingdom and internationally. It operates in three segments: Retail; Commercial Banking; and Insurance, Pensions and Investments. The Retail segment offers a range of financial service products, including current accounts, savings, mortgages, motor finance, unsecured loans, leasing solutions, and credit cards to personal customers. The Commercial Banking segment provides lending, transactional banking, working capital management, risk management, and debt financing services to small and medium-sized entities, corporates, and institutions. The Insurance, Pensions, and Investments segment offers insurance, investment, and pension management products and services. It also provides digital banking services. The company offers its products and services under the Lloyds Bank, Halifax, Bank of Scotland, Scottish Widows, MBNA, Schroders Personal Wealth, Black Horse, Lex Autolease, Birmingham Midshires, LDC, AMC, Embark Group, Citra, IWeb, Cavendish Online, and Tusker brand names. Lloyds Banking Group plc was founded in 1695 and is headquartered in London, the United Kingdom.