Head-To-Head Review: HomeStreet (NASDAQ:HMST) and Fifth Third Bancorp (NASDAQ:FITB)

HomeStreet (NASDAQ:HMST) and Fifth Third Bancorp (NASDAQ:FITB) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

Profitability

This table compares HomeStreet and Fifth Third Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HomeStreet 4.74% 4.74% 0.48%
Fifth Third Bancorp 24.39% 11.51% 1.24%

Dividends

Fifth Third Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 3.8%. HomeStreet does not pay a dividend. Fifth Third Bancorp pays out 37.8% of its earnings in the form of a dividend. Fifth Third Bancorp has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and price targets for HomeStreet and Fifth Third Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HomeStreet 0 1 2 0 2.67
Fifth Third Bancorp 0 10 7 0 2.41

HomeStreet presently has a consensus target price of $30.75, indicating a potential upside of 17.95%. Fifth Third Bancorp has a consensus target price of $31.36, indicating a potential upside of 23.40%. Given Fifth Third Bancorp’s higher probable upside, analysts plainly believe Fifth Third Bancorp is more favorable than HomeStreet.

Volatility & Risk

HomeStreet has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Fifth Third Bancorp has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

92.7% of HomeStreet shares are owned by institutional investors. Comparatively, 81.1% of Fifth Third Bancorp shares are owned by institutional investors. 1.6% of HomeStreet shares are owned by insiders. Comparatively, 0.4% of Fifth Third Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares HomeStreet and Fifth Third Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HomeStreet $507.66 million 1.25 $40.03 million $1.48 17.61
Fifth Third Bancorp $7.97 billion 2.33 $2.19 billion $2.54 10.00

Fifth Third Bancorp has higher revenue and earnings than HomeStreet. Fifth Third Bancorp is trading at a lower price-to-earnings ratio than HomeStreet, indicating that it is currently the more affordable of the two stocks.

Summary

Fifth Third Bancorp beats HomeStreet on 12 of the 17 factors compared between the two stocks.

HomeStreet Company Profile

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank, a state-chartered commercial bank that provides commercial and consumer banking services primarily in the Pacific Northwest, California, and Hawaii. The company operates in two segments, Commercial and Consumer Banking, and Mortgage Banking. The Commercial and Consumer Banking segment offers deposit products; non-deposit investment products; and insurance products and cash management services. It also offers consumer loans, single family residential mortgages, loans secured by commercial real estate, construction loans for residential and commercial real estate projects, commercial business loans, and agricultural loans; and bridge loans and permanent loans primarily on single family residences, as well as on office, retail, industrial, and multifamily property types. This segment provides its products and services through bank branches, lending centers, and ATMs, as well as through online, mobile, and telephone banking. The Mortgage Banking segment originates single family residential mortgage loans for sale in the secondary market. This segment is also involved in the sale of loans on a servicing-released and servicing-retained basis to securitizers and correspondent lenders. As of December 31, 2018, it had a network of 60 retail deposit branches located in Washington state, Southern California, the Portland, Oregon, and Hawaii; and 32 primary stand-alone home loan centers and 6 primary commercial lending centers. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was founded in 1921 and is headquartered in Seattle, Washington.

Fifth Third Bancorp Company Profile

Fifth Third Bancorp operates as a diversified financial services company in the United States. The company's Commercial Banking segment offers credit intermediation, cash management, and financial services; lending and depository products; and cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing, and syndicated finance for business, government, and professional customers. Its Branch Banking segment provides a range of deposit and loan products to individuals and small businesses. This segment offers checking and savings accounts, home equity loans and lines of credit, credit cards, and loans for automobiles and personal financing needs, as well as cash management services for small businesses. The company's Consumer Lending segment engages in direct lending activities that include origination, retention, and servicing of residential mortgage and home equity loans or lines of credit; and indirect lending activities, including loans to consumers through correspondent lenders and automobile dealers. Fifth Third Bancorp's Wealth & Asset Management segment provides various investment alternatives for individuals, companies, and not-for-profit organizations. It offers retail brokerage services to individual clients; and broker dealer services to the institutional marketplace. This segment also provides asset management services; holistic strategies to affluent clients in wealth planning, investing, insurance, and wealth protection; and advisory services for institutional clients comprising states and municipalities. As of December 31, 2018, the company operated 1,121 full-service banking centers and 2,419 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, and North Carolina. Fifth Third Bancorp was founded in 1858 and is headquartered in Cincinnati, Ohio.

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