Associated Banc (NYSE:ASB) and Prosperity Bancshares (NYSE:PB) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.
Profitability
This table compares Associated Banc and Prosperity Bancshares' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Associated Banc | 20.66% | 5.68% | 0.61% |
Prosperity Bancshares | 37.67% | 8.42% | 1.54% |
Analyst Recommendations
This is a breakdown of current ratings and target prices for Associated Banc and Prosperity Bancshares, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Associated Banc | 0 | 7 | 1 | 0 | 2.13 |
Prosperity Bancshares | 1 | 5 | 5 | 0 | 2.36 |
Associated Banc currently has a consensus target price of $15.7143, indicating a potential downside of 28.83%. Prosperity Bancshares has a consensus target price of $73.20, indicating a potential downside of 4.26%. Given Prosperity Bancshares' stronger consensus rating and higher probable upside, analysts plainly believe Prosperity Bancshares is more favorable than Associated Banc.
Dividends
Associated Banc pays an annual dividend of $0.72 per share and has a dividend yield of 3.3%. Prosperity Bancshares pays an annual dividend of $1.96 per share and has a dividend yield of 2.6%. Associated Banc pays out 36.5% of its earnings in the form of a dividend. Prosperity Bancshares 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. Associated Banc has raised its dividend for 1 consecutive years and Prosperity Bancshares has raised its dividend for 1 consecutive years. Associated Banc is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility and Risk
Associated Banc has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.
Institutional and Insider Ownership
72.5% of Associated Banc shares are owned by institutional investors. Comparatively, 76.7% of Prosperity Bancshares shares are owned by institutional investors. 2.4% of Associated Banc shares are owned by company insiders. Comparatively, 4.0% of Prosperity Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Associated Banc and Prosperity Bancshares' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Associated Banc | $1.55 billion | 2.18 | $326.79 million | $1.97 | 11.21 |
Prosperity Bancshares | $957.22 million | 7.42 | $332.55 million | $5.02 | 15.23 |
Prosperity Bancshares has lower revenue, but higher earnings than Associated Banc. Associated Banc is trading at a lower price-to-earnings ratio than Prosperity Bancshares, indicating that it is currently the more affordable of the two stocks.
Summary
Prosperity Bancshares beats Associated Banc on 13 of the 16 factors compared between the two stocks.