Towne Bank (NASDAQ: TOWN) and Flagstar Bancorp (NYSE:FBC) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Earnings and Valuation

This table compares Towne Bank and Flagstar Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Towne Bank $409.84 million 5.04 $67.25 million $1.52 21.71
Flagstar Bancorp $904.00 million 2.38 $171.00 million $2.36 15.92

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

Risk and Volatility

Towne Bank has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Flagstar Bancorp has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Towne Bank and Flagstar Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Towne Bank 0 2 0 0 2.00
Flagstar Bancorp 0 1 6 0 2.86

Towne Bank currently has a consensus target price of $34.00, suggesting a potential upside of 3.03%. Flagstar Bancorp has a consensus target price of $39.17, suggesting a potential upside of 4.22%. Given Flagstar Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Flagstar Bancorp is more favorable than Towne Bank.

Institutional and Insider Ownership

44.3% of Towne Bank shares are held by institutional investors. Comparatively, 97.6% of Flagstar Bancorp shares are held by institutional investors. 63.0% of Flagstar Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Towne Bank and Flagstar Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Towne Bank 19.55% 8.49% 1.14%
Flagstar Bancorp 14.56% 9.77% 0.87%

Dividends

Towne Bank pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Flagstar Bancorp does not pay a dividend. Towne Bank pays out 36.8% of its earnings in the form of a dividend.

Summary

Flagstar Bancorp beats Towne Bank on 11 of the 16 factors compared between the two stocks.

About Towne Bank

TowneBank is a community bank. The Bank offers personal banking services and business banking services. The Bank operates through three segments: Banking, Realty and Insurance. The Banking segment provides loan and deposit services to retail and commercial customers. The Realty segment provides residential real estate services, originations of a range of mortgage loans, resort property management, and residential and commercial title insurance. The Insurance segment provides property and casualty insurance, as well as employee and group benefits. The Bank provides checking accounts, cards, savings, money markets and certificate of deposits (CDs), mobile banking, financial management software, private banking and switch kit. The Bank also offers auto loans, home equity loans, construction loans, lot loans, recreational vehicles, mortgage loans, land acquisition loans, construction loans, development Loans, and personal loans and lines of credit.

About Flagstar Bancorp

Flagstar Bancorp, Inc. is a savings and loan holding company. The Company’s business is primarily conducted through its principal subsidiary, Flagstar Bank, FSB. It operates through four segments: Community Banking, Mortgage Originations, Mortgage Servicing, and Other. Through Mortgage Originations segment, it originates, acquires and sells one- to four-family residential mortgage loans. The Mortgage Servicing segment includes services and subservices mortgage loans, on a fee basis, for others. The Community Banking segment originates loans, provides deposits and fee based services to consumer, business and mortgage lending customers through its Branch Banking, Business and Commercial Banking, Government Banking, Warehouse Lending and Held-for-Investment Portfolio groups. It offers checking accounts, savings accounts, money market accounts, certificates of deposit and others. Other financial services include lines of credit, revolving credit, inventory and accounts receivable.

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