Simmons First National Corporation (NASDAQ: SFNC) and SunTrust Banks (NYSE:STI) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, risk, earnings, profitabiliy, valuation and analyst recommendations.

Profitability

This table compares Simmons First National Corporation and SunTrust Banks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Simmons First National Corporation 21.50% 8.84% 1.23%
SunTrust Banks 20.32% 8.14% 0.91%

Volatility & Risk

Simmons First National Corporation has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, SunTrust Banks has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.

Institutional & Insider Ownership

50.4% of Simmons First National Corporation shares are owned by institutional investors. Comparatively, 81.8% of SunTrust Banks shares are owned by institutional investors. 4.6% of Simmons First National Corporation shares are owned by company insiders. Comparatively, 0.6% of SunTrust Banks shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Simmons First National Corporation and SunTrust Banks’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Simmons First National Corporation $399.74 million 4.12 $96.05 million $3.06 17.16
SunTrust Banks $8.29 billion 3.32 $1.78 billion $3.66 15.47

SunTrust Banks has higher revenue and earnings than Simmons First National Corporation. SunTrust Banks is trading at a lower price-to-earnings ratio than Simmons First National Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Simmons First National Corporation and SunTrust Banks, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Simmons First National Corporation 0 3 1 0 2.25
SunTrust Banks 2 11 10 0 2.35

Simmons First National Corporation currently has a consensus price target of $57.67, indicating a potential upside of 9.84%. SunTrust Banks has a consensus price target of $57.34, indicating a potential upside of 1.28%. Given Simmons First National Corporation’s higher possible upside, research analysts clearly believe Simmons First National Corporation is more favorable than SunTrust Banks.

Dividends

Simmons First National Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. SunTrust Banks pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. Simmons First National Corporation pays out 32.7% of its earnings in the form of a dividend. SunTrust Banks pays out 28.4% 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. Simmons First National Corporation has raised its dividend for 4 consecutive years. Simmons First National Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Simmons First National Corporation beats SunTrust Banks on 9 of the 17 factors compared between the two stocks.

Simmons First National Corporation Company Profile

Simmons First National Corporation is a financial holding company. The Company, through its subsidiary bank, Simmons Bank, provides financial services to individuals and businesses throughout the market areas they serve. As of December 31, 2016, Simmons Bank conducted banking operations through 150 financial centers located in communities throughout Arkansas, Kansas, Missouri and Tennessee. Simmons Bank offers consumer, real estate and commercial loans, checking and savings deposits. Simmons Bank and its subsidiaries have also developed products and services, which include credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and small business administration lending. The securities within the portfolio are classified as either held-to-maturity, available-for-sale or trading. The Company offers deposits, including non-interest bearing transaction accounts; interest bearing transaction accounts, and time deposits.

SunTrust Banks Company Profile

SunTrust Banks, Inc. is a provider of financial services. The Company’s principal subsidiary is SunTrust Bank (the Bank). The Company’s business segments include Consumer Banking and Private Wealth Management, Wholesale Banking, Mortgage Banking and Corporate Other. As of December 31, 2016, the Consumer Banking and Private Wealth Management segment consisted of three primary businesses: Consumer Banking, Consumer Lending and Private Wealth Management. The Wholesale Banking segment includes the operations of the Corporate and investment banking (CIB), Commercial and Business Banking, Commercial Real Estate, and Treasury and Payment Solutions businesses. The Mortgage Banking segment offers residential mortgage products nationally through its retail and correspondent channels, the Internet (www.suntrust.com) and by telephone. The Bank provides clients with a selection of full-, self- and assisted-service channels, including branch, call center, Teller Connect machines, mobile and tablet.

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