Pinnacle Financial Partners (NASDAQ:PNFP – Get Rating) and Webster Financial (NYSE:WBS – Get Rating) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.
Dividends
Pinnacle Financial Partners pays an annual dividend of $0.88 per share and has a dividend yield of 1.2%. Webster Financial pays an annual dividend of $1.60 per share and has a dividend yield of 3.4%. Pinnacle Financial Partners pays out 12.9% of its earnings in the form of a dividend. Webster Financial pays out 51.6% 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. Pinnacle Financial Partners has increased its dividend for 2 consecutive years.
Risk & Volatility
Pinnacle Financial Partners has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, Webster Financial has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and price targets for Pinnacle Financial Partners and Webster Financial, as provided by MarketBeat.com.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Pinnacle Financial Partners | 0 | 1 | 5 | 0 | 2.83 |
Webster Financial | 0 | 2 | 3 | 1 | 2.83 |
Pinnacle Financial Partners currently has a consensus price target of $110.80, suggesting a potential upside of 45.92%. Webster Financial has a consensus price target of $66.60, suggesting a potential upside of 42.06%. Given Pinnacle Financial Partners’ higher probable upside, analysts plainly believe Pinnacle Financial Partners is more favorable than Webster Financial.
Earnings and Valuation
This table compares Pinnacle Financial Partners and Webster Financial’s top-line revenue, earnings per share and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Pinnacle Financial Partners | $1.43 billion | 4.06 | $527.32 million | $6.80 | 11.17 |
Webster Financial | $1.27 billion | 6.65 | $408.86 million | $3.10 | 15.12 |
Pinnacle Financial Partners has higher revenue and earnings than Webster Financial. Pinnacle Financial Partners is trading at a lower price-to-earnings ratio than Webster Financial, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
80.4% of Pinnacle Financial Partners shares are held by institutional investors. Comparatively, 46.0% of Webster Financial shares are held by institutional investors. 2.1% of Pinnacle Financial Partners shares are held by company insiders. Comparatively, 1.9% of Webster Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares Pinnacle Financial Partners and Webster Financial’s net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Pinnacle Financial Partners | 36.76% | 10.59% | 1.42% |
Webster Financial | 19.35% | 11.74% | 1.22% |
Summary
Pinnacle Financial Partners beats Webster Financial on 11 of the 17 factors compared between the two stocks.
About Pinnacle Financial Partners (Get Rating)
Pinnacle Financial Partners, Inc., together with its subsidiaries, operates as the bank holding company for Pinnacle Bank that provides various banking products and services in the United States. The company accepts various deposits, including savings, checking, noninterest-bearing and interest-bearing checking, money market, and certificate of deposit accounts. Its loan products include commercial loans, such as equipment and working capital loans; commercial real estate loans comprising investment properties and business loans secured by real estate; and loans to individuals consisting of secured and unsecured installment and term loans, lines of credit, residential first mortgage loans, and home equity loans and lines of credit, as well as provides credit cards for consumers and businesses. The company also offers various securities and other financial products; investment products; brokerage and investment advisory programs; and fiduciary and investment management services, such as personal trust, endowments, foundations, individual retirement accounts, pensions, and custody. In addition, it provides insurance agency services primarily in the property and casualty area; merger and acquisition advisory services; and private debt, equity and mezzanine, and other middle-market advisory services. Further, the company offers treasury management, telephone and online banking, mobile banking, debit cards, direct deposit and remote deposit capture, mobile deposit option, automated teller machine, and cash management services. It serves individuals, small to medium-sized businesses, and professional entities. As of December 31, 2020, the company operated 114 offices, including 48 in Tennessee, 36 in North Carolina, 20 in South Carolina, 9 in Virginia, and 1 in Georgia. Pinnacle Financial Partners, Inc. was incorporated in 2000 and is headquartered in Nashville, Tennessee.
About Webster Financial (Get Rating)
Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of banking, investment, and financial services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Retail Banking. The Commercial Banking segment provides lending, deposit, and cash management services; commercial and industrial lending and leasing, commercial real estate lending, equipment financing, and asset-based lending, as well as treasury and payment services; wealth management solutions to business owners, operators, and consumers; and trust, asset management, financial planning, insurance, retirement, and investment products. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, consultants, and financial advisors. The Retail Banking segment provides deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers. The company also offers online and mobile banking services. As of December 31, 2021, it operated 130 banking centers and 251 ATMs. The company was founded in 1935 and is headquartered in Stamford, Connecticut.
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Read More: Financial Contrast: Pinnacle Financial Partners (NASDAQ:PNFP) versus Webster Financial