SunTrust Banks (NYSE: STI) and United Community Financial Corp. (NASDAQ:UCFC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.
Institutional & Insider Ownership
82.1% of SunTrust Banks shares are held by institutional investors. Comparatively, 58.8% of United Community Financial Corp. shares are held by institutional investors. 0.6% of SunTrust Banks shares are held by company insiders. Comparatively, 3.6% of United Community Financial Corp. shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
SunTrust Banks pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. United Community Financial Corp. pays an annual dividend of $0.16 per share and has a dividend yield of 1.8%. SunTrust Banks pays out 27.7% of its earnings in the form of a dividend. United Community Financial Corp. pays out 39.0% 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. SunTrust Banks has increased its dividend for 4 consecutive years. SunTrust Banks is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares SunTrust Banks and United Community Financial Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United Community Financial Corp.||18.95%||8.90%||1.00%|
This is a breakdown of recent ratings and price targets for SunTrust Banks and United Community Financial Corp., as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United Community Financial Corp.||1||0||2||0||2.33|
SunTrust Banks currently has a consensus price target of $59.47, indicating a potential upside of 3.77%. United Community Financial Corp. has a consensus price target of $10.50, indicating a potential upside of 16.28%. Given United Community Financial Corp.’s higher possible upside, analysts clearly believe United Community Financial Corp. is more favorable than SunTrust Banks.
Volatility and Risk
SunTrust Banks has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, United Community Financial Corp. has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.
Earnings and Valuation
This table compares SunTrust Banks and United Community Financial Corp.’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|SunTrust Banks||$8.39 billion||3.29||$1.81 billion||$3.75||15.28|
|United Community Financial Corp.||$91.25 million||4.92||$20.38 million||$0.41||22.02|
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 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.
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.
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