Analyzing Citigroup (C) & Cardinal Financial (CFNL)

Cardinal Financial (NASDAQ: CFNL) and Citigroup (NYSE:C) are both banks – nec companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, profitability, earnings, institutional ownership and risk.

Dividends

Cardinal Financial pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Citigroup pays an annual dividend of $1.28 per share and has a dividend yield of 1.7%. Cardinal Financial pays out 35.4% of its earnings in the form of a dividend. Citigroup pays out 24.7% 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. Cardinal Financial has increased its dividend for 2 consecutive years. Cardinal Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Cardinal Financial and Citigroup’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cardinal Financial 27.09% 10.86% 1.17%
Citigroup 18.11% 7.48% 0.85%

Earnings & Valuation

This table compares Cardinal Financial and Citigroup’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cardinal Financial N/A N/A N/A $1.47 19.76
Citigroup $82.39 billion 2.40 $14.91 billion $5.19 14.41

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

Insider & Institutional Ownership

75.2% of Cardinal Financial shares are owned by institutional investors. Comparatively, 78.6% of Citigroup shares are owned by institutional investors. 6.2% of Cardinal Financial shares are owned by company insiders. Comparatively, 0.1% of Citigroup shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Cardinal Financial has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Citigroup has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Cardinal Financial and Citigroup, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cardinal Financial 0 1 0 0 2.00
Citigroup 1 7 13 0 2.57

Cardinal Financial presently has a consensus price target of $31.00, indicating a potential upside of 6.75%. Citigroup has a consensus price target of $77.14, indicating a potential upside of 3.17%. Given Cardinal Financial’s higher probable upside, equities research analysts clearly believe Cardinal Financial is more favorable than Citigroup.

About Cardinal Financial

Cardinal Financial Corporation is a financial holding company. The Company owns Cardinal Bank (the Bank), a Virginia state-chartered community bank. The Bank operates in three business segments: commercial banking, mortgage banking and wealth management services. The commercial banking segment includes both commercial and consumer lending and provides customers such products as commercial loans, real estate loans, and other business financing and consumer loans. In addition, the commercial banking segment provides customers with several choices of deposit products, including demand deposit accounts, savings accounts and certificates of deposit. The mortgage banking segment is engaged in the origination and acquisition of residential mortgages for sale into the secondary market. The wealth management services segment provides investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning and investment management.

About Citigroup

Citigroup Inc. (Citi) is a financial services holding company. The Company’s whose businesses provide consumers, corporations, governments and institutions with a range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, trade and securities services and wealth management. The Company operates through two segments: Citicorp and Citi Holdings. Citicorp is the Company’s global bank for consumers and businesses and represents its core franchises. Citicorp is focused on providing products and services to customers and leveraging the Company’s global network, including various economies. As of December 31, 2016, Citicorp was present in 97 countries and jurisdictions, and offered services in over 160 countries and jurisdictions. Global Consumer Banking (GCB) provides traditional banking services to retail customers through retail banking, including Citi-branded cards and Citi retail services.

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