PacWest Bancorp (NASDAQ:PACW) and Fifth Third Bancorp (NASDAQ:FITB) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.
Insider & Institutional Ownership
82.4% of PacWest Bancorp shares are held by institutional investors. Comparatively, 79.2% of Fifth Third Bancorp shares are held by institutional investors. 1.4% of PacWest Bancorp shares are held by insiders. Comparatively, 0.5% of Fifth Third Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Volatility & Risk
PacWest Bancorp has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500. Comparatively, Fifth Third Bancorp has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for PacWest Bancorp and Fifth Third Bancorp, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| PacWest Bancorp | 0 | 2 | 5 | 0 | 2.71 |
| Fifth Third Bancorp | 0 | 6 | 12 | 0 | 2.67 |
PacWest Bancorp currently has a consensus price target of $29.1250, suggesting a potential downside of 19.63%. Fifth Third Bancorp has a consensus price target of $29.3194, suggesting a potential downside of 15.48%. Given Fifth Third Bancorp's higher probable upside, analysts plainly believe Fifth Third Bancorp is more favorable than PacWest Bancorp.
Dividends
PacWest Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. Fifth Third Bancorp pays an annual dividend of $1.08 per share and has a dividend yield of 3.1%. PacWest Bancorp pays out 25.6% 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. PacWest Bancorp has raised its dividend for 1 consecutive years and Fifth Third Bancorp has raised 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.
Profitability
This table compares PacWest Bancorp and Fifth Third Bancorp's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| PacWest Bancorp | -98.27% | 6.14% | 0.86% |
| Fifth Third Bancorp | 17.50% | 7.52% | 0.80% |
Earnings and Valuation
This table compares PacWest Bancorp 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 |
|---|
| PacWest Bancorp | $1.36 billion | 3.11 | $468.64 million | $3.90 | 9.29 |
| Fifth Third Bancorp | $9.79 billion | 2.52 | $2.51 billion | $2.77 | 12.52 |
Fifth Third Bancorp has higher revenue and earnings than PacWest Bancorp. PacWest Bancorp 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.
Summary
Fifth Third Bancorp beats PacWest Bancorp on 9 of the 17 factors compared between the two stocks.
