First Horizon National Corporation (FHN) versus First Defiance Financial Corp. (FDEF) Critical Review
First Horizon National Corporation (NYSE: FHN) and First Defiance Financial Corp. (NASDAQ:FDEF) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.
This is a breakdown of recent ratings and price targets for First Horizon National Corporation and First Defiance Financial Corp., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|First Horizon National Corporation||0||9||5||0||2.36|
|First Defiance Financial Corp.||0||1||1||0||2.50|
First Horizon National Corporation presently has a consensus price target of $19.78, suggesting a potential upside of 2.64%. First Defiance Financial Corp. has a consensus price target of $54.50, suggesting a potential upside of 1.58%. Given First Horizon National Corporation’s higher probable upside, equities analysts clearly believe First Horizon National Corporation is more favorable than First Defiance Financial Corp..
Volatility and Risk
First Horizon National Corporation has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, First Defiance Financial Corp. has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.
Insider & Institutional Ownership
85.1% of First Horizon National Corporation shares are owned by institutional investors. Comparatively, 63.9% of First Defiance Financial Corp. shares are owned by institutional investors. 2.1% of First Horizon National Corporation shares are owned by insiders. Comparatively, 3.4% of First Defiance Financial Corp. shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares First Horizon National Corporation and First Defiance Financial Corp.’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|First Horizon National Corporation||$1.28 billion||3.52||$262.23 million||$1.12||17.21|
|First Defiance Financial Corp.||$121.81 million||4.47||$29.94 million||$2.95||18.19|
First Horizon National Corporation has higher revenue and earnings than First Defiance Financial Corp.. First Horizon National Corporation is trading at a lower price-to-earnings ratio than First Defiance Financial Corp., indicating that it is currently the more affordable of the two stocks.
This table compares First Horizon National Corporation and First Defiance Financial Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|First Horizon National Corporation||19.36%||9.40%||0.86%|
|First Defiance Financial Corp.||20.85%||9.35%||1.13%|
First Horizon National Corporation pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. First Defiance Financial Corp. pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. First Horizon National Corporation pays out 32.1% of its earnings in the form of a dividend. First Defiance Financial Corp. pays out 33.9% 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 Horizon National Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
First Horizon National Corporation beats First Defiance Financial Corp. on 9 of the 16 factors compared between the two stocks.
About First Horizon National Corporation
First Horizon National Corporation (FHN) is a bank holding company. The Company provides financial services through its subsidiary, First Tennessee Bank National Association (the Bank). The Company has four segments: regional banking, fixed income, corporate and non-strategic. The Company’s regional banking segment offers financial products and services, including traditional lending and deposit taking, to retail and commercial customers in Tennessee and other selected markets. The regional banking segment provides investments and financial planning. The Company’s fixed income segment consists of fixed income securities sales, trading, and strategies for institutional clients in the United States and abroad. The Company’s corporate segment consists of funds management, tax credit investment activities and gains on the extinguishment of debt, among others. The non-strategic segment offers wind-down national consumer lending activities and mortgage banking elements.
About First Defiance Financial Corp.
First Defiance Financial Corp. is a unitary thrift holding company that focuses on traditional banking and property and casualty, life and group health insurance products. The Company operates through its subsidiaries, First Federal Bank of the Midwest (First Federal or the Bank), First Insurance Group of the Midwest, Inc. (First Insurance) and First Defiance Risk Management Inc. (First Defiance Risk Management). First Federal is a federally chartered stock savings bank. First Federal’s banking activities include originating and servicing residential, commercial, and consumer loans, and providing a range of depository, trust and wealth management services. First Insurance offers property and casualty, and group health and life insurance products. First Defiance Risk Management is an insurance company subsidiary of the Company to insure the Company and its subsidiaries against certain risks to the operations of the Company.
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