Contrasting Toronto Dominion Bank (TD) and Centerstate Bank (CSFL)

Toronto Dominion Bank (NYSE: TD) and Centerstate Bank (NASDAQ:CSFL) are both financials companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Institutional and Insider Ownership

48.8% of Toronto Dominion Bank shares are owned by institutional investors. Comparatively, 75.8% of Centerstate Bank shares are owned by institutional investors. 3.7% of Centerstate Bank shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Toronto Dominion Bank and Centerstate Bank, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toronto Dominion Bank 0 2 6 0 2.75
Centerstate Bank 0 3 0 0 2.00

Toronto Dominion Bank currently has a consensus target price of $77.67, indicating a potential upside of 32.04%. Centerstate Bank has a consensus target price of $28.50, indicating a potential upside of 9.03%. Given Toronto Dominion Bank’s stronger consensus rating and higher probable upside, research analysts clearly believe Toronto Dominion Bank is more favorable than Centerstate Bank.

Risk & Volatility

Toronto Dominion Bank has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Centerstate Bank has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Earnings & Valuation

This table compares Toronto Dominion Bank and Centerstate Bank’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Toronto Dominion Bank $34.52 billion 3.14 $7.95 billion $4.39 13.40
Centerstate Bank $253.03 million 6.21 $42.34 million $1.26 20.75

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

Profitability

This table compares Toronto Dominion Bank and Centerstate Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toronto Dominion Bank 23.09% 15.17% 0.86%
Centerstate Bank 23.39% 10.36% 1.29%

Dividends

Toronto Dominion Bank pays an annual dividend of $1.87 per share and has a dividend yield of 3.2%. Centerstate Bank pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Toronto Dominion Bank pays out 42.6% of its earnings in the form of a dividend. Centerstate Bank pays out 19.0% 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.

Summary

Toronto Dominion Bank beats Centerstate Bank on 9 of the 16 factors compared between the two stocks.

About Toronto Dominion Bank

Toronto-Dominion Bank (the Bank) is a Canada-based bank, which operates in the North America. It is an online financial services firm, with over 10.2 million online and mobile customers. Its segments include Canadian Retail, U.S. Retail, Wholesale Banking and Corporate. The Canadian Retail segment provides a range of financial products and services to customers in the Canadian personal and commercial banking businesses. The U.S. Retail segment consists of its retail and commercial banking operations operating under the brand TD Bank, and wealth management services in the United States. The Wholesale Banking segment provides a range of capital markets, investment banking, and corporate banking products and services, including underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, funding and investment needs of its clients. The Corporate segment provides centralized advice and counsel to its businesses.

About Centerstate Bank

CenterState Bank Corporation, formerly CenterState Banks, Inc., is a financial holding company, which owns CenterState Bank of Florida, N.A. (CenterState Bank or the Bank). The Company provides a range of consumer and commercial banking services to individuals, businesses and industries. The Company’s segments include commercial and retail banking, correspondent banking and capital markets division, and corporate overhead and administration. Its commercial and retail banking segment provides traditional deposit and lending products and services to its commercial and retail customers. Its correspondent banking and capital markets segment operates as a division within its subsidiary bank, which provides hedging services, loan brokerage and consulting services. The Bank offers a range of lending services, including consumer and commercial loans, to individuals and small businesses and organizations that are located in or conduct a substantial portion of their business in its market area.

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