Critical Review: Western Alliance Bancorporation (WAL) vs. Financial Institutions (FISI)

Western Alliance Bancorporation (NYSE: WAL) and Financial Institutions (NASDAQ:FISI) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Dividends

Financial Institutions pays an annual dividend of $0.88 per share and has a dividend yield of 2.7%. Western Alliance Bancorporation does not pay a dividend. Financial Institutions pays out 41.5% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Western Alliance Bancorporation 36.56% 15.82% 1.72%
Financial Institutions 20.34% 9.31% 0.78%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Western Alliance Bancorporation and Financial Institutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Alliance Bancorporation 0 0 10 0 3.00
Financial Institutions 0 2 1 0 2.33

Western Alliance Bancorporation currently has a consensus price target of $66.85, indicating a potential upside of 11.53%. Financial Institutions has a consensus price target of $32.25, indicating a potential downside of 0.15%. Given Western Alliance Bancorporation’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Western Alliance Bancorporation is more favorable than Financial Institutions.

Institutional and Insider Ownership

81.8% of Western Alliance Bancorporation shares are owned by institutional investors. Comparatively, 69.2% of Financial Institutions shares are owned by institutional investors. 8.0% of Western Alliance Bancorporation shares are owned by insiders. Comparatively, 5.5% of Financial Institutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Alliance Bancorporation $890.86 million 7.10 $325.49 million $3.10 19.34
Financial Institutions $164.84 million 3.06 $31.93 million $2.12 15.24

Western Alliance Bancorporation has higher revenue and earnings than Financial Institutions. Financial Institutions 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.

Risk and Volatility

Western Alliance Bancorporation has a beta of 1.76, suggesting that its stock price is 76% more volatile than the S&P 500. Comparatively, Financial Institutions has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.

Summary

Western Alliance Bancorporation beats Financial Institutions on 15 of the 16 factors compared between the two stocks.

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.

About Financial Institutions

Financial Institutions, Inc. is a financial holding company. The Company conducts its business through its subsidiaries: Five Star Bank (the Bank), a New York chartered bank; Scott Danahy Naylon, LLC (SDN), a full service insurance agency, and Courier Capital, LLC (Courier Capital), an investment advisory and wealth management company. The Company operates through two segments: Banking and Non-Banking. The Banking segment includes all of the Company’s retail and commercial banking operations. The Non-Banking segment includes the activities of SDN and Courier Capital. The Company offers a range of banking and related financial services to consumer, commercial and municipal customers through its bank and nonbank subsidiaries. The Company’s indirect lending network includes relationships with franchised automobile dealers in Western and Central New York, the Capital District of New York and Northern and Central Pennsylvania.

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