Contrasting State Bank Financial (STBZ) and State Street (STT)

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State Bank Financial (NYSE: STT) and State Street (NYSE:STT) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, valuation, analyst recommendations, risk, earnings, dividends and institutional ownership.

Profitability

This table compares State Bank Financial and State Street’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
State Bank Financial 20.06% 10.64% 1.38%
State Street 19.56% 14.98% 1.19%

Dividends

State Bank Financial pays an annual dividend of $0.80 per share and has a dividend yield of 2.5%. State Street pays an annual dividend of $1.68 per share and has a dividend yield of 1.9%. State Bank Financial pays out 54.8% of its earnings in the form of a dividend. State Street pays out 28.2% 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. State Bank Financial has raised its dividend for 5 consecutive years and State Street has raised its dividend for 7 consecutive years.

Insider and Institutional Ownership

79.0% of State Bank Financial shares are held by institutional investors. Comparatively, 86.6% of State Street shares are held by institutional investors. 4.4% of State Bank Financial shares are held by company insiders. Comparatively, 0.4% of State Street 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.

Volatility & Risk

State Bank Financial has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, State Street has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Valuation & Earnings

This table compares State Bank Financial and State Street’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
State Bank Financial $248.13 million 4.96 $46.57 million $1.46 21.58
State Street $11.81 billion 2.70 $2.18 billion $5.96 14.65

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for State Bank Financial and State Street, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
State Bank Financial 0 6 1 0 2.14
State Street 0 5 6 0 2.55

State Bank Financial currently has a consensus target price of $35.90, suggesting a potential upside of 13.97%. State Street has a consensus target price of $105.69, suggesting a potential upside of 21.08%. Given State Street’s stronger consensus rating and higher probable upside, analysts plainly believe State Street is more favorable than State Bank Financial.

Summary

State Street beats State Bank Financial on 11 of the 17 factors compared between the two stocks.

State Bank Financial Company Profile

State Bank Financial Corporation operates as the bank holding company for State Bank and Trust Company that provides various community banking services to individuals and businesses. The company's deposit products and services include checking, commercial operating, savings and money market, and individual retirement accounts, as well as short- to longer-term certificates of deposit, commercial and consumer demand deposit, and savings and time deposit products. It also provides commercial and residential real estate mortgage, real estate construction, commercial and industrial, agriculture and consumer, real estate, real estate construction and development, commercial, financial, and agricultural loans, as well as loans to small and medium-sized businesses. In addition, the company offers correspondent banking products; payment solutions for funds collection and concentration services, such as ACH origination, electronic bill presentment and payment, remote deposit capture and cash deposit, retail and wholesale lockbox, and wire services. Further, it provides cash management accounts; disbursement services comprising online bill pay, person-to-person payments, and bank-to-bank transfers; fraud controls that include Positive Pay, ACH Decisioning, and IBM Security Trusteer Rapport malware protection; and online cash management systems. Additionally, the company offers payroll services, which comprise automated human resources information system, payroll, benefit, labor management, and insurance services; and online banking and bill payment, safe deposit box rental, debit card, and automated teller machine card services. As of December 31, 2017, it operated 32 full-service banking offices in Georgia, which comprises Bibb, Chatham, Clarke, Cobb, Columbia, Dooly, Fulton, Gwinnett, Hall, Houston, Jones, Liberty, McDuffie, Richmond, and Tattnall counties. The company was founded in 2005 and is headquartered in Atlanta, Georgia.

State Street Company Profile

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody; product and participant level accounting; daily pricing and administration; master trust and master custody; depotbank services; record-keeping; cash management; foreign exchange, brokerage, and other trading services; securities finance; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also provides investment management services, such as investment management, investment research, and investment advisory services to corporations, public funds, and other sophisticated investors, as well as offers passive and active asset management strategies across equity, fixed-income, alternative, multi-asset solutions, and cash asset classes. The company offers its products and services to mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.

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