Contrasting KeyCorp (KEY) & Cape Bancorp (CBNJ)

Cape Bancorp (NASDAQ: CBNJ) and KeyCorp (NYSE:KEY) are both banks – nec companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Dividends

Cape Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.7%. KeyCorp pays an annual dividend of $0.42 per share and has a dividend yield of 2.1%. Cape Bancorp pays out 43.5% of its earnings in the form of a dividend. KeyCorp pays out 36.8% 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. Cape Bancorp has raised its dividend for 6 consecutive years. Cape Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

80.9% of KeyCorp shares are held by institutional investors. 0.7% of KeyCorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Cape Bancorp and KeyCorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cape Bancorp N/A N/A N/A $0.92 15.86
KeyCorp $5.39 billion 4.02 $791.00 million $1.14 17.69

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

Analyst Ratings

This is a breakdown of recent ratings for Cape Bancorp and KeyCorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cape Bancorp 0 0 0 0 N/A
KeyCorp 1 6 14 0 2.62

KeyCorp has a consensus price target of $21.19, suggesting a potential upside of 5.04%. Given KeyCorp’s higher possible upside, analysts plainly believe KeyCorp is more favorable than Cape Bancorp.

Profitability

This table compares Cape Bancorp and KeyCorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cape Bancorp 13.12% 4.73% 0.50%
KeyCorp 18.69% 10.35% 1.07%

Volatility & Risk

Cape Bancorp has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, KeyCorp has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Summary

KeyCorp beats Cape Bancorp on 12 of the 14 factors compared between the two stocks.

About Cape Bancorp

Cape Bancorp, Inc. (Cape Bancorp) is the holding company of Cape Bank (the Bank). The Bank focuses on providing deposit and loan products to retail customers and to small and mid-sized businesses from its fourteen full service branch offices, located in Atlantic and Cape May Counties, one drive-up teller/ATM operation in Atlantic County, three market development offices (MDOs) located in Burlington, Cape May and Atlantic Counties in New Jersey, and two MDOs in Pennsylvania servicing the five county Philadelphia market located in Radnor, Delaware County and in Philadelphia. It attracts deposits from the general public and uses those funds to originate a variety of loans, including commercial mortgages, commercial business loans, home equity loans and lines of credit (HELOC) and construction loans. Its retail and business banking deposit products include checking accounts, money market accounts, savings accounts, and certificates of deposit with terms ranging from 30 days to 60 months.

About KeyCorp

KeyCorp is a bank holding company. The Company is a bank-based financial services company. The Company operates through its subsidiary, KeyBank National Association (KeyBank), which is engaged in providing banking services. Through KeyBank and other subsidiaries, it provides a range of retail and commercial banking, commercial leasing, investment management, consumer finance, and investment banking products and services to individual, corporate and institutional clients. Its segments include Key Community Bank and Key Corporate Bank. Key Community Bank serves individuals and small to mid-sized businesses by offering a range of deposit, investment, lending, credit card, and personalized wealth management products and business advisory services. Key Corporate Bank is a full-service corporate and investment bank focused on serving the needs of middle market clients in industry sectors, which include consumer, energy, healthcare, industrial, public sector, real estate and technology.

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