Enterprise Financial Services (NASDAQ:EFSC) and Fifth Third Bancorp (NASDAQ:FITB) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.
Volatility & Risk
Enterprise Financial Services has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500. Comparatively, Fifth Third Bancorp has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500.
Profitability
This table compares Enterprise Financial Services and Fifth Third Bancorp's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Enterprise Financial Services | 21.40% | 8.61% | 0.94% |
| Fifth Third Bancorp | 17.50% | 7.52% | 0.80% |
Earnings and Valuation
This table compares Enterprise Financial Services and Fifth Third Bancorp's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Enterprise Financial Services | $354.31 million | 3.79 | $92.74 million | $4.08 | 10.55 |
| Fifth Third Bancorp | $9.79 billion | 2.55 | $2.51 billion | $2.77 | 12.67 |
Fifth Third Bancorp has higher revenue and earnings than Enterprise Financial Services. Enterprise Financial Services 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 and Institutional Ownership
71.4% of Enterprise Financial Services shares are held by institutional investors. Comparatively, 79.2% of Fifth Third Bancorp shares are held by institutional investors. 9.0% of Enterprise Financial Services shares are held by company insiders. Comparatively, 0.5% of Fifth Third Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Dividends
Enterprise Financial Services pays an annual dividend of $0.72 per share and has a dividend yield of 1.7%. Fifth Third Bancorp pays an annual dividend of $1.08 per share and has a dividend yield of 3.1%. Enterprise Financial Services pays out 17.6% of its earnings in the form of a dividend. Fifth Third Bancorp 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. Enterprise Financial Services has increased its dividend for 1 consecutive years and Fifth Third Bancorp has increased its dividend for 4 consecutive years. Fifth Third Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of recent recommendations for Enterprise Financial Services and Fifth Third Bancorp, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Enterprise Financial Services | 0 | 0 | 1 | 0 | 3.00 |
| Fifth Third Bancorp | 0 | 6 | 12 | 0 | 2.67 |
Enterprise Financial Services currently has a consensus target price of $40.00, suggesting a potential downside of 6.65%. Fifth Third Bancorp has a consensus target price of $29.3194, suggesting a potential downside of 15.34%. Given Enterprise Financial Services' stronger consensus rating and higher probable upside, equities analysts plainly believe Enterprise Financial Services is more favorable than Fifth Third Bancorp.
Summary
Enterprise Financial Services beats Fifth Third Bancorp on 9 of the 17 factors compared between the two stocks.
