SunTrust Banks (STI) & Cullen/Frost Bankers (NYSE:CFR) Head-To-Head Contrast

SunTrust Banks (NYSE:STI) and Cullen/Frost Bankers (NYSE:CFR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Dividends

SunTrust Banks pays an annual dividend of $2.00 per share and has a dividend yield of 3.3%. Cullen/Frost Bankers pays an annual dividend of $2.68 per share and has a dividend yield of 2.9%. SunTrust Banks pays out 35.1% of its earnings in the form of a dividend. Cullen/Frost Bankers pays out 38.8% 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. SunTrust Banks has raised its dividend for 6 consecutive years and Cullen/Frost Bankers has raised its dividend for 26 consecutive years. SunTrust Banks is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

SunTrust Banks has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500. Comparatively, Cullen/Frost Bankers has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500.

Profitability

This table compares SunTrust Banks and Cullen/Frost Bankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SunTrust Banks 25.26% 12.22% 1.28%
Cullen/Frost Bankers 32.16% 14.30% 1.48%

Analyst Recommendations

This is a summary of recent recommendations and price targets for SunTrust Banks and Cullen/Frost Bankers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SunTrust Banks 0 12 6 0 2.33
Cullen/Frost Bankers 1 5 2 0 2.13

SunTrust Banks presently has a consensus price target of $71.49, indicating a potential upside of 18.16%. Cullen/Frost Bankers has a consensus price target of $103.50, indicating a potential upside of 11.17%. Given SunTrust Banks’ stronger consensus rating and higher probable upside, analysts clearly believe SunTrust Banks is more favorable than Cullen/Frost Bankers.

Valuation and Earnings

This table compares SunTrust Banks and Cullen/Frost Bankers’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SunTrust Banks $10.43 billion 2.57 $2.78 billion $5.70 10.61
Cullen/Frost Bankers $1.40 billion 4.19 $454.91 million $6.90 13.49

SunTrust Banks has higher revenue and earnings than Cullen/Frost Bankers. SunTrust Banks is trading at a lower price-to-earnings ratio than Cullen/Frost Bankers, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

80.3% of SunTrust Banks shares are held by institutional investors. Comparatively, 80.8% of Cullen/Frost Bankers shares are held by institutional investors. 0.4% of SunTrust Banks shares are held by insiders. Comparatively, 4.8% of Cullen/Frost Bankers shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Cullen/Frost Bankers beats SunTrust Banks on 9 of the 17 factors compared between the two stocks.

SunTrust Banks Company Profile

SunTrust Banks, Inc. operates as the holding company for SunTrust Bank that provides various financial services for consumers, businesses, corporations, institutions, and not-for-profit entities in the United States. It operates in two segments, Consumer and Wholesale. The Consumer segment provides deposits and payments; home equity and personal credit lines; auto, student, and other lending products; credit cards; discount/online and full-service brokerage products; professional investment advisory products and services; and trust services, as well as family office solutions. This segment also offers residential mortgage products in the secondary market. The Wholesale segment provides capital markets solutions, including advisory, capital raising, and financial risk management; asset-based financing solutions, such as securitizations, asset-based lending, equipment financing, and structured real estate arrangements; cash management services and auto dealer financing solutions; investment banking solutions; and credit and deposit, fee-based product offering, multi-family agency lending, advisory, commercial mortgage brokerage, and tailored financing and equity investment solutions. This segment also offers treasury and payment solutions, such as operating various electronic and paper payment types, which comprise card, wire transfer, automated clearing house, check, and cash; and provides services clients to manage their accounts online. The company offers its products and services through a network of traditional and in-store branches, automated teller machines, Internet, mobile, and telephone banking channels. As of December 31, 2018, it operated 1,218 full-service banking offices located in Florida, Georgia, Virginia, North Carolina, Tennessee, Maryland, South Carolina, and the District of Columbia. SunTrust Banks, Inc. was founded in 1891 and is headquartered in Atlanta, Georgia.

Cullen/Frost Bankers Company Profile

Cullen/Frost Bankers, Inc. operates as the holding company for Frost Bank that offers commercial and consumer banking services in Texas. It operates in two segments, Banking and Frost Wealth Advisors. The company offers commercial banking services to corporations and other business clients, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; commercial leasing; and treasury management services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds, and foreign exchange services. Further, it acts as a correspondent for approximately 194 financial institutions; offers trust, investment, agency, and custodial services for individual and corporate clients; provides capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and supports international business activities. Additionally, the company offers insurance and securities brokerage services; holds securities for investment purposes; and provides loans to qualified borrowers, as well as investment management services to Frost-managed mutual funds, institutions, and individuals. It operates approximately 131 financial centers and 1,200 ATMs. The company serves the energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. Cullen/Frost Bankers, Inc. was founded in 1868 and is headquartered in San Antonio, Texas.

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