First Commonwealth Financial (FCF) and Popular (BPOP) Critical Analysis

First Commonwealth Financial (NYSE: FCF) and Popular (NASDAQ:BPOP) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Dividends

First Commonwealth Financial pays an annual dividend of $0.32 per share and has a dividend yield of 2.1%. Popular pays an annual dividend of $1.00 per share and has a dividend yield of 2.6%. First Commonwealth Financial pays out 43.2% of its earnings in the form of a dividend. Popular pays out 51.0% 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.

Institutional & Insider Ownership

65.6% of First Commonwealth Financial shares are held by institutional investors. Comparatively, 88.9% of Popular shares are held by institutional investors. 1.7% of First Commonwealth Financial shares are held by insiders. Comparatively, 1.3% of Popular shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

First Commonwealth Financial has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Popular has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for First Commonwealth Financial and Popular, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Commonwealth Financial 0 3 3 0 2.50
Popular 1 2 7 0 2.60

First Commonwealth Financial presently has a consensus target price of $9.80, indicating a potential downside of 35.27%. Popular has a consensus target price of $46.75, indicating a potential upside of 20.96%. Given Popular’s stronger consensus rating and higher possible upside, analysts plainly believe Popular is more favorable than First Commonwealth Financial.

Profitability

This table compares First Commonwealth Financial and Popular’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Commonwealth Financial 21.96% 9.53% 1.11%
Popular 4.32% 1.51% 0.20%

Valuation & Earnings

This table compares First Commonwealth Financial and Popular’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Commonwealth Financial $282.21 million 5.23 $59.59 million $0.74 20.46
Popular $1.93 billion 2.04 $216.69 million $1.96 19.72

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

Summary

Popular beats First Commonwealth Financial on 9 of the 16 factors compared between the two stocks.

First Commonwealth Financial Company Profile

First Commonwealth Financial Corporation is a financial holding company. The Company, through its subsidiary, First Commonwealth Bank (the Bank), provides a range of consumer and commercial banking services. The Company also provides trust and wealth management services, and offers insurance products through the Bank and its other operating subsidiaries. The Bank is a Pennsylvania bank and trust company. As of December 31, 2016, the Bank operated 105 community banking offices throughout western and central Pennsylvania, 17 community banking offices in Central Ohio and loan production offices in Akron and Cleveland, Ohio. As of December 31, 2016, the Bank also operated a network of 133 automated teller machines (ATMs) at various branch offices and offsite locations. As of December 31, 2016, the Bank operated 122 community banking offices throughout western Pennsylvania and central and northern Ohio, as well as loan production offices in Akron and Cleveland, Ohio.

Popular Company Profile

Popular, Inc. (Popular) is a financial holding company. The Company operates in two segments: Banco Popular de Puerto Rico (BPPR), which includes its Puerto Rico business, and Banco Popular North America (BPNA), which includes its the United States mainland business. The Company has operations in Puerto Rico, the United States and the Caribbean. The Company’s BPPR segment provides retail, mortgage and commercial banking services through its banking subsidiary, Banco Popular de Puerto Rico, as well as auto and equipment leasing and financing, investment banking, broker-dealer and insurance services through specialized subsidiaries. The Company’s BPNA segment consists of Popular North America, Inc. (PNA) functioning as the holding company for its operations in the United States. It also operates PNA’s subsidiary, E-LOAN, Inc. The banking operations of BPNA in the United States mainland are based in New York, Florida and New Jersey, conducted under the name of Popular Community Bank.

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