United Community Financial Corp. (NASDAQ: UCFC) and SunTrust Banks (NYSE:STI) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitabiliy, risk, institutional ownership and valuation.
Insider & Institutional Ownership
58.6% of United Community Financial Corp. shares are owned by institutional investors. Comparatively, 81.8% of SunTrust Banks shares are owned by institutional investors. 3.6% of United Community Financial Corp. shares are owned by insiders. Comparatively, 0.6% of SunTrust Banks shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This table compares United Community Financial Corp. and SunTrust Banks’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United Community Financial Corp.||18.95%||9.10%||1.03%|
Risk and Volatility
United Community Financial Corp. has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, SunTrust Banks has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for United Community Financial Corp. and SunTrust Banks, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United Community Financial Corp.||1||0||2||0||2.33|
United Community Financial Corp. currently has a consensus target price of $9.00, indicating a potential downside of 2.17%. SunTrust Banks has a consensus target price of $57.34, indicating a potential upside of 3.08%. Given SunTrust Banks’ stronger consensus rating and higher probable upside, analysts plainly believe SunTrust Banks is more favorable than United Community Financial Corp..
United Community Financial Corp. pays an annual dividend of $0.12 per share and has a dividend yield of 1.3%. SunTrust Banks pays an annual dividend of $1.04 per share and has a dividend yield of 1.9%. United Community Financial Corp. pays out 29.3% of its earnings in the form of a dividend. SunTrust Banks pays out 28.4% 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. United Community Financial Corp. has raised its dividend for 4 consecutive years. SunTrust Banks is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings & Valuation
This table compares United Community Financial Corp. and SunTrust Banks’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|United Community Financial Corp.||$85.60 million||5.34||$20.37 million||$0.41||22.44|
|SunTrust Banks||$8.29 billion||3.26||$1.78 billion||$3.66||15.20|
SunTrust Banks has higher revenue and earnings than United Community Financial Corp.. SunTrust Banks is trading at a lower price-to-earnings ratio than United Community Financial Corp., indicating that it is currently the more affordable of the two stocks.
SunTrust Banks beats United Community Financial Corp. on 11 of the 17 factors compared between the two stocks.
About United Community Financial Corp.
United Community Financial Corp. is financial services holding company. The Company’s subsidiaries include The Home Savings and Loan Company of Youngstown, Ohio (Home Savings or the Bank), HSB Insurance, LLC and HSB Capital, LLC. The principal business of Home Savings is the origination of mortgage loans, including construction loans, on residential and nonresidential real estate located in Home Savings’ primary market area. In addition to real estate lending, Home Savings originates commercial loans and various types of consumer loans. Funds for lending and other investment activities are obtained primarily from retail deposits. HSB Insurance, LLC is an insurance agency that offers a range of insurance products for business and residential customers, which include, auto, homeowners, life-health, commercial, surety bonds and aviation. HSB Capital, LLC provides mezzanine funding for customers. Mezzanine loans are offered to customers in United Community’s market area.
About SunTrust Banks
SunTrust Banks, Inc. is a provider of financial services. The Company’s principal subsidiary is SunTrust Bank (the Bank). The Company’s business segments include Consumer Banking and Private Wealth Management, Wholesale Banking, Mortgage Banking and Corporate Other. As of December 31, 2016, the Consumer Banking and Private Wealth Management segment consisted of three primary businesses: Consumer Banking, Consumer Lending and Private Wealth Management. The Wholesale Banking segment includes the operations of the Corporate and investment banking (CIB), Commercial and Business Banking, Commercial Real Estate, and Treasury and Payment Solutions businesses. The Mortgage Banking segment offers residential mortgage products nationally through its retail and correspondent channels, the Internet (www.suntrust.com) and by telephone. The Bank provides clients with a selection of full-, self- and assisted-service channels, including branch, call center, Teller Connect machines, mobile and tablet.
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