1st Source Corporation (NASDAQ: SRCE) and Citizens Financial Group (NYSE:CFG) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, institutional ownership, valuation and risk.
1st Source Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 1.4%. Citizens Financial Group pays an annual dividend of $0.72 per share and has a dividend yield of 1.9%. 1st Source Corporation pays out 30.4% of its earnings in the form of a dividend. Citizens Financial Group pays out 29.1% 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. 1st Source Corporation has increased its dividend for 31 consecutive years and Citizens Financial Group has increased its dividend for 2 consecutive years. Citizens Financial Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares 1st Source Corporation and Citizens Financial Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|1st Source Corporation||21.74%||9.43%||1.16%|
|Citizens Financial Group||20.26%||6.44%||0.84%|
Valuation and Earnings
This table compares 1st Source Corporation and Citizens Financial Group’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|1st Source Corporation||$261.58 million||5.24||$64.84 million||$2.50||21.13|
|Citizens Financial Group||$5.17 billion||3.72||$1.24 billion||$2.47||15.57|
Citizens Financial Group has higher revenue and earnings than 1st Source Corporation. Citizens Financial Group is trading at a lower price-to-earnings ratio than 1st Source Corporation, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
70.4% of 1st Source Corporation shares are owned by institutional investors. Comparatively, 96.5% of Citizens Financial Group shares are owned by institutional investors. 20.3% of 1st Source Corporation shares are owned by company insiders. Comparatively, 0.2% of Citizens Financial Group shares are owned by company 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.
Volatility & Risk
1st Source Corporation has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, Citizens Financial Group has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500.
This is a breakdown of current ratings for 1st Source Corporation and Citizens Financial Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|1st Source Corporation||0||2||1||0||2.33|
|Citizens Financial Group||2||7||6||0||2.27|
1st Source Corporation presently has a consensus target price of $51.67, indicating a potential downside of 2.18%. Citizens Financial Group has a consensus target price of $38.29, indicating a potential downside of 0.43%. Given Citizens Financial Group’s higher probable upside, analysts plainly believe Citizens Financial Group is more favorable than 1st Source Corporation.
1st Source Corporation beats Citizens Financial Group on 9 of the 17 factors compared between the two stocks.
1st Source Corporation Company Profile
1st Source Corporation is a bank holding company. The Company, through its subsidiaries, provides a range of financial products and services. It is engaged in commercial banking. 1st Source Bank (Bank), its banking subsidiary, offers commercial and consumer banking services, trust and wealth advisory services, and insurance to individual and business clients. The Bank offers a range of consumer and commercial banking services through its lending operations, retail branches and fee based businesses. It provides commercial, small business, agricultural, and real estate loans to primarily business clients mainly located within its regional market area. It provides a range of consumer banking products and services through its banking centers and at 1stsource.com. It also offers insurance products through 1st Source Insurance offices. It also provides a range of trust, investment, agency, and custodial services for individual, corporate and not-for-profit clients.
Citizens Financial Group Company Profile
Citizens Financial Group, Inc. is a retail bank holding company. The Company operates through two segments: Consumer Banking and Commercial Banking. Its Consumer Banking serves retail customers and small businesses. Consumer Banking products and services include deposit products, mortgage and home equity lending, auto financing, student loans, personal unsecured lines and loans, credit cards, business loans, wealth management and investment services. The Company’s Commercial Banking segment offers a range of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange and interest rate risk management solutions, as well as corporate finance, merger and acquisition, and debt and equity capital markets capabilities. The Company delivers a range of retail and commercial banking products and services to individuals, institutions and companies. As of December 31, 2016, the Company operated approximately 1,200 branches.
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