Critical Review: KeyCorp (NYSE:KEY) versus Fifth Third Bancorp (NASDAQ:FITB)

KeyCorp (NYSE:KEYGet Free Report) and Fifth Third Bancorp (NASDAQ:FITBGet Free Report) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Dividends

KeyCorp pays an annual dividend of $0.82 per share and has a dividend yield of 5.0%. Fifth Third Bancorp pays an annual dividend of $1.48 per share and has a dividend yield of 3.7%. KeyCorp pays out -482.4% of its earnings in the form of a dividend. Fifth Third Bancorp pays out 47.0% 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. Fifth Third Bancorp has raised its dividend for 14 consecutive years. KeyCorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for KeyCorp and Fifth Third Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KeyCorp 0 11 9 1 2.52
Fifth Third Bancorp 0 5 12 2 2.84

KeyCorp presently has a consensus target price of $18.92, indicating a potential upside of 14.70%. Fifth Third Bancorp has a consensus target price of $47.53, indicating a potential upside of 18.38%. Given Fifth Third Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Fifth Third Bancorp is more favorable than KeyCorp.

Risk and Volatility

KeyCorp has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500. Comparatively, Fifth Third Bancorp has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Profitability

This table compares KeyCorp and Fifth Third Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KeyCorp -0.12% 9.43% 0.74%
Fifth Third Bancorp 17.65% 13.64% 1.14%

Earnings and Valuation

This table compares KeyCorp and Fifth Third Bancorp”s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KeyCorp $4.64 billion 3.90 -$161.00 million ($0.17) -97.04
Fifth Third Bancorp $13.28 billion 2.02 $2.31 billion $3.15 12.75

Fifth Third Bancorp has higher revenue and earnings than KeyCorp. KeyCorp is trading at a lower price-to-earnings ratio than Fifth Third Bancorp, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

79.7% of KeyCorp shares are held by institutional investors. Comparatively, 83.8% of Fifth Third Bancorp shares are held by institutional investors. 0.5% of KeyCorp shares are held by insiders. Comparatively, 0.5% of Fifth Third Bancorp shares are held by 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.

Summary

Fifth Third Bancorp beats KeyCorp on 14 of the 18 factors compared between the two stocks.

About KeyCorp

(Get Free Report)

KeyCorp operates as the holding company for KeyBank National Association that provides various retail and commercial banking products and services in the United States. It operates in two segments, Consumer Bank and Commercial Bank. The company offers various deposits, investment products and services; commercial leasing, investment management, consumer finance; and personal finance and financial wellness, student loan refinancing, mortgage and home equity, lending, credit card, treasury, business advisory, wealth management, asset management, cash management, portfolio management, and trust and related services to individuals and small and medium-sized businesses. It also provides a suite of banking and capital market products, such as syndicated finance, debt and equity capital market products, commercial payments, equipment finance, commercial mortgage banking, derivatives, foreign exchange, financial advisory, and public finance, as well as commercial mortgage loans to consumer, energy, healthcare, industrial, public sector, real estate, and technology sectors for middle market clients. In addition, the company offers community development financing, securities underwriting, brokerage, and investment banking services. The company was founded in 1849 and is headquartered in Cleveland, Ohio.

About Fifth Third Bancorp

(Get Free Report)

Fifth Third Bancorp operates as the bank holding company for Fifth Third Bank, National Association that engages in the provision of a range of financial products and services in the United States. It operates through three segments: Commercial Banking, Consumer and Small Business Banking, and Wealth and Asset Management. The Commercial Banking segment offers credit intermediation, cash management, and financial services; lending and depository products; and cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing, and syndicated finance for business, government, and professional customers. The Consumer and Small Banking segment provides a range of deposit and loan products to individuals and small businesses; home equity loans and lines of credit; credit cards; and cash management services. This segment also engages in the residential mortgage that include origination, retention and servicing of residential mortgage loans, sales and securitizations of loans, and hedging activities; indirect lending, including extending loans to consumers through automobile dealers, motorcycle dealers, powersport dealers, recreational vehicle dealers, and marine dealers; and home improvement and solar energy installation loans through contractors and installers. The Wealth & Asset Management segment provides various wealth management services for individuals, companies, and not-for-profit organizations. It offers retail brokerage services to individual clients; and broker dealer services to the institutional marketplace. This segment also provides wealth planning, investment management, banking, insurance, and trust and estate services; and advisory services for institutional clients comprising middle market businesses, non-profits, states, and municipalities. The company was founded in 1858 and is headquartered in Cincinnati, Ohio.

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