Umpqua (NASDAQ: UMPQ) and Webster Financial (NYSE:WBS) are both mid-cap financials companies, but which is the better business? We will compare the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, dividends, analyst recommendations and risk.

Risk & Volatility

Umpqua has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Webster Financial has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.

Insider and Institutional Ownership

88.2% of Umpqua shares are owned by institutional investors. Comparatively, 86.8% of Webster Financial shares are owned by institutional investors. 0.5% of Umpqua shares are owned by company insiders. Comparatively, 2.2% of Webster Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Umpqua pays an annual dividend of $0.72 per share and has a dividend yield of 3.2%. Webster Financial pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. Umpqua pays out 67.9% of its earnings in the form of a dividend. Webster Financial pays out 40.9% 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. Umpqua has increased its dividend for 7 consecutive years. Umpqua is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Umpqua and Webster Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Umpqua 1 4 3 0 2.25
Webster Financial 0 6 3 0 2.33

Umpqua presently has a consensus target price of $20.94, indicating a potential downside of 6.40%. Webster Financial has a consensus target price of $58.13, indicating a potential downside of 1.32%. Given Webster Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Webster Financial is more favorable than Umpqua.

Profitability

This table compares Umpqua and Webster Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Umpqua 19.04% 5.79% 0.91%
Webster Financial 21.09% 9.89% 0.93%

Valuation & Earnings

This table compares Umpqua and Webster Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Umpqua $1.21 billion 4.07 $232.94 million $1.06 21.10
Webster Financial $1.09 billion 5.37 $207.12 million $2.54 23.19

Umpqua has higher revenue and earnings than Webster Financial. Umpqua is trading at a lower price-to-earnings ratio than Webster Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Webster Financial beats Umpqua on 11 of the 16 factors compared between the two stocks.

Umpqua Company Profile

Umpqua Holdings Corporation is a bank holding company. The Company’s principal operating subsidiaries include Umpqua Bank (the Bank) and Umpqua Investments, Inc. (Umpqua Investments). It operates through two segments: Community Banking and Home Lending. The Community Banking segment’s principal business focus is the offering of loan and deposit products to business and retail customers in its primary market areas. As of December 31, 2016, the Community Banking segment operated 346 locations throughout Oregon, California, Washington, Idaho and Nevada. The Home Lending segment originates, sells and services residential mortgage loans. The Company offers a range of traditional and digital financial products. Its products and services include Deposit Products, Private Bank, Broker Dealer and Investment Advisory Services, Commercial Loans and Leases and Commercial Real Estate Loans, and Consumer Loans.

Webster Financial Company Profile

Webster Financial Corporation is a bank and financial holding company. The Company’s segments include Commercial Banking, Community Banking, HSA Bank, Private Banking, and Corporate and Reconciling. The Commercial Banking segment includes middle-market, asset-based lending, commercial real estate, equipment finance, and treasury and payment solutions, which includes government and institutional banking. The Community Banking segment consists of its Personal Banking and Business Banking segments. HSA Bank, a division of its subsidiary, Webster Bank, National Association, offers health savings accounts, health reimbursement accounts, flexible spending accounts, and other financial solutions. Private Banking serves high-net-worth clients, not-for-profit organizations, and business clients with asset management, trust, loan and deposit products, and financial planning services. Its treasury unit and consumer-liquidating portfolio are included in the Corporate and Reconciling segment.

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