SunTrust Banks (NYSE: STI) and Union Bankshares Corporation (NASDAQ:UBSH) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, dividends, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Institutional and Insider Ownership

82.1% of SunTrust Banks shares are owned by institutional investors. Comparatively, 62.7% of Union Bankshares Corporation shares are owned by institutional investors. 0.6% of SunTrust Banks shares are owned by insiders. Comparatively, 2.2% of Union Bankshares Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for SunTrust Banks and Union Bankshares Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SunTrust Banks 1 10 10 0 2.43
Union Bankshares Corporation 0 1 2 1 3.00

SunTrust Banks currently has a consensus price target of $60.57, indicating a potential upside of 7.90%. Union Bankshares Corporation has a consensus price target of $38.50, indicating a potential upside of 23.24%. Given Union Bankshares Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Union Bankshares Corporation is more favorable than SunTrust Banks.

Profitability

This table compares SunTrust Banks and Union Bankshares Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SunTrust Banks 20.51% 8.48% 0.93%
Union Bankshares Corporation 20.42% 7.97% 0.94%

Valuation & Earnings

This table compares SunTrust Banks and Union Bankshares Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SunTrust Banks $8.39 billion 3.22 $1.81 billion $3.75 14.97
Union Bankshares Corporation $336.61 million 4.06 $78.67 million $1.80 17.36

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

Dividends

SunTrust Banks pays an annual dividend of $1.04 per share and has a dividend yield of 1.9%. Union Bankshares Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 2.6%. SunTrust Banks pays out 27.7% of its earnings in the form of a dividend. Union Bankshares Corporation pays out 44.4% 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. Union Bankshares Corporation has increased its dividend for 4 consecutive years. Union Bankshares Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

SunTrust Banks has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, Union Bankshares Corporation has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

SunTrust Banks Company Profile

SunTrust Banks, Inc. is a provider of financial services. The Company’s principal subsidiary is SunTrust Bank (the Bank). The Company’s business segments include Consumer Banking and Private Wealth Management, Wholesale Banking, Mortgage Banking and Corporate Other. As of December 31, 2016, the Consumer Banking and Private Wealth Management segment consisted of three primary businesses: Consumer Banking, Consumer Lending and Private Wealth Management. The Wholesale Banking segment includes the operations of the Corporate and investment banking (CIB), Commercial and Business Banking, Commercial Real Estate, and Treasury and Payment Solutions businesses. The Mortgage Banking segment offers residential mortgage products nationally through its retail and correspondent channels, the Internet (www.suntrust.com) and by telephone. The Bank provides clients with a selection of full-, self- and assisted-service channels, including branch, call center, Teller Connect machines, mobile and tablet.

Union Bankshares Corporation Company Profile

Union Bankshares Corporation is a financial holding company and bank holding company. The Company operates through two segments: a community bank segment and mortgage loan origination business segment. The Company offers financial services through its community bank subsidiary, Union Bank & Trust (the Bank) and three non-bank financial services affiliates. The Company’s non-bank financial services affiliates include Union Mortgage Group, Inc. (UMG), Union Insurance Group, LLC and Old Dominion Capital Management, Inc. The community bank segment included one subsidiary bank, which provided loan, deposit, investment, and trust services to retail and commercial customers throughout its 114 retail locations in Virginia, as of December 31, 2016. The mortgage segment includes UMG, which provides a range of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area.

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