Stifel Financial (NYSE:SF) vs. Bank of America (NYSE:BAC) Critical Review

Stifel Financial (NYSE:SF) and Bank of America (NYSE:BAC) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, risk, analyst recommendations and profitability.

Valuation & Earnings

This table compares Stifel Financial and Bank of America”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stifel Financial	$5.53 billion	2.07	$683.78 million	$5.14	14.51
Bank of America	$191.57 billion	1.87	$30.51 billion	$4.04	12.51

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

Volatility & Risk

Stifel Financial has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, Bank of America has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Stifel Financial and Bank of America, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stifel Financial	1	3	6	0	2.50
Bank of America	0	5	22	0	2.81

Stifel Financial presently has a consensus price target of $91.15, suggesting a potential upside of 22.20%. Bank of America has a consensus price target of $61.06, suggesting a potential upside of 20.85%. Given Stifel Financial’s higher probable upside, equities analysts clearly believe Stifel Financial is more favorable than Bank of America.

Profitability

This table compares Stifel Financial and Bank of America’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stifel Financial	15.34%	18.76%	2.33%
Bank of America	16.78%	11.49%	0.93%

Dividends

Stifel Financial pays an annual dividend of $1.36 per share and has a dividend yield of 1.8%. Bank of America pays an annual dividend of $1.12 per share and has a dividend yield of 2.2%. Stifel Financial pays out 26.5% of its earnings in the form of a dividend. Bank of America pays out 27.7% 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. Stifel Financial has increased its dividend for 9 consecutive years and Bank of America has increased its dividend for 11 consecutive years. Bank of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

82.0% of Stifel Financial shares are held by institutional investors. Comparatively, 70.7% of Bank of America shares are held by institutional investors. 3.4% of Stifel Financial shares are held by insiders. Comparatively, 0.3% of Bank of America shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Stifel Financial beats Bank of America on 9 of the 17 factors compared between the two stocks.

About Stifel Financial

Stifel Financial Corp., a financial services and bank holding company, provides retail and institutional wealth management, and investment banking services to individual investors, corporations, municipalities, and institutions in the United States and internationally. It operates in three segments: Global Wealth Management, Institutional Group, and Other. The company provides private client services, including securities transaction and financial planning services; institutional equity and fixed income sales, trading and research, and municipal finance services; investment banking services, such as mergers and acquisitions, public offerings, and private placements; and retail and commercial banking services comprising personal and commercial lending programs, as well as deposit accounts. It participates in and manages underwritings for corporate and public finance; and offers financial advisory and securities brokerage services. The company was founded in 1890 and is headquartered in Saint Louis, Missouri.

About Bank of America

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates in four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, non-interest and interest-bearing checking accounts, and investment accounts and products; credit and debit cards; residential mortgages, and home equity loans; and direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The GWIM segment provides investment management, brokerage, banking, and trust and retirement products and services; wealth management solutions; and customized solutions, including specialty asset management services. The Global Banking segment offers lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, short-term investing options, and merchant services; working capital management solutions; debt and equity underwriting and distribution, and merger-related and other advisory services; and fixed-income and equity research, and certain market-based services. The Global Markets segment provides market-making, financing, securities clearing, settlement, and custody services; securities and derivative products; and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1784 and is based in Charlotte, North Carolina.