Fulton Financial (NASDAQ:FULT) vs. First Commonwealth Financial (NYSE:FCF) Critical Review

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Fulton Financial	20.85%	12.69%	1.28%
First Commonwealth Financial	21.19%	10.56%	1.32%

Volatility and Risk

Fulton Financial has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, First Commonwealth Financial has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Institutional and Insider Ownership

72.0% of Fulton Financial shares are held by institutional investors. Comparatively, 72.6% of First Commonwealth Financial shares are held by institutional investors. 0.0% of Fulton Financial shares are held by insiders. Comparatively, 1.9% of First Commonwealth Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Fulton Financial and First Commonwealth Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fulton Financial	$1.89 billion	2.19	$391.61 million	$2.10	10.33
First Commonwealth Financial	$729.51 million	2.65	$152.30 million	$1.51	12.58

Fulton Financial has higher revenue and earnings than First Commonwealth Financial. Fulton Financial 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.

Analyst Ratings

This is a summary of current ratings for Fulton Financial and First Commonwealth Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fulton Financial	0	5	2	0	2.29
First Commonwealth Financial	0	3	3	0	2.50

Fulton Financial currently has a consensus price target of $23.00, indicating a potential upside of 6.04%. First Commonwealth Financial has a consensus price target of $20.33, indicating a potential upside of 7.06%. Given First Commonwealth Financial’s stronger consensus rating and higher probable upside, analysts clearly believe First Commonwealth Financial is more favorable than Fulton Financial.

Dividends

Fulton Financial pays an annual dividend of $0.76 per share and has a dividend yield of 3.5%. First Commonwealth Financial pays an annual dividend of $0.56 per share and has a dividend yield of 2.9%. Fulton Financial pays out 36.2% of its earnings in the form of a dividend. First Commonwealth Financial pays out 37.1% 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. Fulton Financial has increased its dividend for 4 consecutive years and First Commonwealth Financial has increased its dividend for 9 consecutive years. Fulton Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

First Commonwealth Financial beats Fulton Financial on 10 of the 17 factors compared between the two stocks.

About Fulton Financial

Fulton Financial Corporation operates as a financial holding company that provides consumer and commercial banking products and services in Pennsylvania, Delaware, Maryland, New Jersey, and Virginia. It accepts various checking accounts and savings deposit products, certificates of deposit, and individual retirement accounts. The company offers consumer loans products, including home equity loans and lines of credit, automobile loans, personal lines of credit, and checking account overdraft protection; construction and jumbo residential mortgage loans; and commercial lending products comprising commercial real estate, commercial and industrial, and construction loans, as well as equipment lease financing loans. In addition, it offers letters of credit, cash management services, and traditional deposit products; and wealth management services, including investment management, trust, brokerage, insurance, and investment advisory services. Further, the company owns trust preferred securities; and sells various life insurance products. It provides its products and services through financial center offices, as well as through a network of automated teller machines, telephone banking, mobile banking, and online banking. Fulton Financial Corporation was founded in 1882 and is headquartered in Lancaster, Pennsylvania.

About First Commonwealth Financial

First Commonwealth Financial Corporation, a financial holding company, provides various consumer and commercial banking services in the United States. Its consumer services include personal checking accounts, interest-earning checking accounts, savings and health savings accounts, insured money market accounts, debit cards, investment certificates, fixed and variable rate certificates of deposit, mortgage loans, secured and unsecured installment loans, construction and real estate loans, safe deposit facilities, credit cards, credit lines with overdraft checking protection, IRA accounts, and automated teller machine (atm) services, as well as internet, mobile, and telephone banking services. The company's commercial banking services comprise commercial lending, business checking accounts, online account management services, payroll direct deposits, commercial cash management services, and repurchase agreements, as well as ACH origination services. In addition, it offers various trust and asset management services; auto, home, and business insurance, as well as term life insurance; and annuities, mutual funds, and stock and bond brokerage services through a broker-dealer and insurance brokers. The company was founded in 1934 and is headquartered in Indiana, Pennsylvania.