Capitol Federal Financial (NASDAQ: CFFN) and Cardinal Financial (NASDAQ:CFNL) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, valuation, profitabiliy, dividends and earnings.

Profitability

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

Net Margins Return on Equity Return on Assets
Capitol Federal Financial 25.58% 6.04% 0.90%
Cardinal Financial 27.09% 10.86% 1.17%

Dividends

Capitol Federal Financial pays an annual dividend of $0.34 per share and has a dividend yield of 2.4%. Cardinal Financial pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Capitol Federal Financial pays out 54.8% of its earnings in the form of a dividend. Cardinal Financial pays out 34.7% 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.

Risk and Volatility

Capitol Federal Financial has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500. Comparatively, Cardinal Financial has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Institutional & Insider Ownership

76.5% of Capitol Federal Financial shares are held by institutional investors. Comparatively, 75.2% of Cardinal Financial shares are held by institutional investors. 2.5% of Capitol Federal Financial shares are held by insiders. Comparatively, 6.2% of Cardinal Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Capitol Federal Financial and Cardinal Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capitol Federal Financial $214.73 million 8.87 $83.20 million $0.62 22.90
Cardinal Financial N/A N/A N/A $1.50 19.41

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Capitol Federal Financial and Cardinal Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capitol Federal Financial 0 2 0 0 2.00
Cardinal Financial 1 2 0 0 1.67

Capitol Federal Financial presently has a consensus price target of $15.00, indicating a potential upside of 5.63%. Cardinal Financial has a consensus price target of $31.00, indicating a potential upside of 6.49%. Given Cardinal Financial’s higher possible upside, analysts clearly believe Cardinal Financial is more favorable than Capitol Federal Financial.

Summary

Cardinal Financial beats Capitol Federal Financial on 8 of the 12 factors compared between the two stocks.

Capitol Federal Financial Company Profile

Capitol Federal Financial, Inc. is the savings and loan holding company. The Company provides a range of retail banking services, through its subsidiary, Capitol Federal Savings Bank (the Bank), a federal savings bank that serves primarily the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and portions of the metropolitan area of greater Kansas City. The Company attracts retail deposits from the general public and invests those funds primarily in permanent loans secured by first mortgages on owner-occupied, one- to four-family residences. In addition to providing full service banking offices, it provides its customers mobile banking, telephone banking and bill payment services, and online banking and bill payment services. Its primary lending business is originating and purchasing loans secured by one- to four-family residential properties, which results in a loan concentration in residential first mortgage loans located in Kansas and Missouri.

Cardinal Financial Company Profile

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.

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