Critical Review: State Bank Financial (STBZ) & Citizens Financial Group (CFG)

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State Bank Financial (NASDAQ:STBZ) and Citizens Financial Group (NYSE:CFG) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

79.0% of State Bank Financial shares are owned by institutional investors. Comparatively, 96.8% of Citizens Financial Group shares are owned by institutional investors. 4.4% of State Bank Financial shares are owned by company insiders. Comparatively, 0.2% of Citizens Financial 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for State Bank Financial and Citizens Financial Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
State Bank Financial 0 6 1 0 2.14
Citizens Financial Group 0 4 6 0 2.60

State Bank Financial presently has a consensus target price of $35.90, suggesting a potential upside of 30.97%. Citizens Financial Group has a consensus target price of $47.13, suggesting a potential upside of 30.50%. Given State Bank Financial’s higher possible upside, equities analysts clearly believe State Bank Financial is more favorable than Citizens Financial Group.

Volatility and Risk

State Bank Financial has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Citizens Financial Group has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500.

Dividends

State Bank Financial pays an annual dividend of $0.80 per share and has a dividend yield of 2.9%. Citizens Financial Group pays an annual dividend of $1.08 per share and has a dividend yield of 3.0%. State Bank Financial pays out 54.8% of its earnings in the form of a dividend. Citizens Financial Group pays out 41.9% 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 Citizens Financial Group has raised its dividend for 3 consecutive years. Citizens Financial Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares State Bank Financial and Citizens Financial Group’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%
Citizens Financial Group 26.72% 7.59% 0.99%

Valuation and Earnings

This table compares State Bank Financial and Citizens Financial Group’s top-line 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 4.32 $46.57 million $1.46 18.77
Citizens Financial Group $6.45 billion 2.66 $1.65 billion $2.58 14.00

Citizens Financial Group has higher revenue and earnings than State Bank Financial. Citizens Financial Group 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.

Summary

Citizens Financial Group beats State Bank Financial on 10 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.

Citizens Financial Group Company Profile

Citizens Financial Group, Inc. operates as the bank holding company for Citizens Bank, National Association and Citizens Bank of Pennsylvania that provide retail and commercial banking products and services in the United States. The company operates in two segments, Consumer Banking and Commercial Banking. The Consumer Banking segment offers traditional banking products and services, including checking, savings, home loans, education loans, credit cards, business loans, and unsecured product finance and personal loans, as well as wealth management and investment services to retail customers and small businesses. This segment also provides indirect auto finance for new and used vehicles through auto dealerships. The Commercial Banking segment offers various financial products and solutions, such as loans, leases, trade financing, deposits, cash management, commercial cards, foreign exchange, interest rate risk management, corporate finance, and capital markets advisory capabilities. It serves government banking, not-for-profit, healthcare, technology, professionals, oil and gas, asset finance, franchise finance, asset-based lending, commercial real estate, private equity, and sponsor finance industries focusing on middle-market companies, large corporations, and institutions. Citizens Financial Group, Inc. operates approximately 1,150 branches in 11 states across the New England, Mid-Atlantic, and Midwest regions, as well as through online, telephone, and mobile banking platforms; and maintains approximately 130 retail and commercial non-branch offices located in its banking footprint and in other states, and the District of Columbia. The company was formerly known as RBS Citizens Financial Group, Inc. and changed its name to Citizens Financial Group, Inc. in April 2014. Citizens Financial Group, Inc. was founded in 1828 and is headquartered in Providence, Rhode Island.

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