First Financial Bankshares (NASDAQ:FFIN) and Veritex (NASDAQ:VBTX) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for First Financial Bankshares and Veritex, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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First Financial Bankshares | 1 | 1 | 0 | 0 | 1.50 |
Veritex | 0 | 0 | 1 | 1 | 3.50 |
First Financial Bankshares presently has a consensus target price of $34.6667, indicating a potential downside of 26.15%. Veritex has a consensus target price of $31.50, indicating a potential downside of 7.08%. Given Veritex's stronger consensus rating and higher probable upside, analysts clearly believe Veritex is more favorable than First Financial Bankshares.
Earnings & Valuation
This table compares First Financial Bankshares and Veritex's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
First Financial Bankshares | $427.62 million | 15.61 | $164.81 million | $1.21 | 38.77 |
Veritex | $408.87 million | 4.10 | $90.74 million | $2.29 | 14.80 |
First Financial Bankshares has higher revenue and earnings than Veritex. Veritex is trading at a lower price-to-earnings ratio than First Financial Bankshares, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
48.3% of First Financial Bankshares shares are held by institutional investors. Comparatively, 79.2% of Veritex shares are held by institutional investors. 4.4% of First Financial Bankshares shares are held by company insiders. Comparatively, 5.3% of Veritex shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Dividends
First Financial Bankshares pays an annual dividend of $0.52 per share and has a dividend yield of 1.1%. Veritex pays an annual dividend of $0.68 per share and has a dividend yield of 2.0%. First Financial Bankshares pays out 43.0% of its earnings in the form of a dividend. Veritex pays out 29.7% 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. First Financial Bankshares has raised its dividend for 10 consecutive years and Veritex has raised its dividend for 1 consecutive years. Veritex is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility & Risk
First Financial Bankshares has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Veritex has a beta of 1.77, suggesting that its stock price is 77% more volatile than the S&P 500.
Profitability
This table compares First Financial Bankshares and Veritex's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
First Financial Bankshares | 38.10% | 12.42% | 1.90% |
Veritex | 21.03% | 6.70% | 0.93% |
Summary
Veritex beats First Financial Bankshares on 10 of the 18 factors compared between the two stocks.