Reviewing Citizens Financial Group (CFG) & Western Alliance Bancorporation (WAL)

Citizens Financial Group (NYSE: CFG) and Western Alliance Bancorporation (NYSE:WAL) are both mid-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Institutional & Insider Ownership

98.5% of Citizens Financial Group shares are held by institutional investors. Comparatively, 81.9% of Western Alliance Bancorporation shares are held by institutional investors. 0.2% of Citizens Financial Group shares are held by company insiders. Comparatively, 8.0% of Western Alliance Bancorporation shares are held 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.

Earnings and Valuation

This table compares Citizens Financial Group and Western Alliance Bancorporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Citizens Financial Group $6.45 billion 3.57 $1.65 billion $3.27 14.32
Western Alliance Bancorporation $743.42 million 8.46 $259.79 million $2.92 20.41

Citizens Financial Group has higher revenue and earnings than Western Alliance Bancorporation. Citizens Financial Group is trading at a lower price-to-earnings ratio than Western Alliance Bancorporation, 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 Citizens Financial Group and Western Alliance Bancorporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Citizens Financial Group 2 4 7 0 2.38
Western Alliance Bancorporation 0 0 9 0 3.00

Citizens Financial Group currently has a consensus target price of $41.08, indicating a potential downside of 12.25%. Western Alliance Bancorporation has a consensus target price of $63.39, indicating a potential upside of 6.34%. Given Western Alliance Bancorporation’s stronger consensus rating and higher probable upside, analysts clearly believe Western Alliance Bancorporation is more favorable than Citizens Financial Group.

Profitability

This table compares Citizens Financial Group and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Citizens Financial Group 25.60% 6.73% 0.88%
Western Alliance Bancorporation 36.16% 15.37% 1.67%

Dividends

Citizens Financial Group pays an annual dividend of $0.72 per share and has a dividend yield of 1.5%. Western Alliance Bancorporation does not pay a dividend. Citizens Financial Group pays out 22.0% of its earnings in the form of a dividend. Western Alliance Bancorporation has raised its dividend for 3 consecutive years.

Risk & Volatility

Citizens Financial Group has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.76, meaning that its share price is 76% more volatile than the S&P 500.

Summary

Western Alliance Bancorporation beats Citizens Financial Group on 12 of the 17 factors compared between the two stocks.

About Citizens Financial Group

Citizens Financial Group, Inc. is a retail bank holding company. The Company operates through two segments: Consumer Banking and Commercial Banking. Its Consumer Banking serves retail customers and small businesses. Consumer Banking products and services include deposit products, mortgage and home equity lending, auto financing, student loans, personal unsecured lines and loans, credit cards, business loans, wealth management and investment services. The Company’s Commercial Banking segment offers a range of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange and interest rate risk management solutions, as well as corporate finance, merger and acquisition, and debt and equity capital markets capabilities. The Company delivers a range of retail and commercial banking products and services to individuals, institutions and companies. As of December 31, 2016, the Company operated approximately 1,200 branches.

About Western Alliance Bancorporation

Western Alliance Bancorporation is a bank holding company. The Company provides a range of deposit, lending, treasury management, international banking and online banking products and services through its banking subsidiary, Western Alliance Bank (WAB or the Bank). The Company’s regional segments include Arizona, Nevada, Southern California and Northern California, which provide banking and related services to their respective markets. The operations from the regional segments correspond to the banking divisions, which include Alliance Bank of Arizona (ABA) in Arizona, Bank of Nevada (BON) and First Independent Bank (FIB) in Nevada, Torrey Pines Bank (TPB) in Southern California, and Bridge Bank in Northern California. The Company’s National Business Lines (NBL) segments include HOA Services, Hotel Franchise Finance (HFF), Public & Nonprofit Finance, Technology & Innovation, Other NBLs, which provide specialized banking services to niche markets.

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