Critical Analysis: Wintrust Financial (NASDAQ:WTFC) vs. HomeStreet (NASDAQ:HMST)

HomeStreet ( NASDAQ:HMST – Get a Free Report ) and Wintrust Financial ( NASDAQ:WTFC – Get a Free Report ) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

dividends

HomeStreet pays an annual dividend of $0.40 per share and has a dividend yield of 2.8%. Wintrust Financial pays an annual dividend of $1.80 per share and has a dividend yield of 1.8%. HomeStreet pays out -18.8% of earnings as a dividend. Wintrust Financial pays out 18.6% of earnings as a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next few years. Wintrust Financial has increased its dividend for 11 consecutive years. HomeStreet is clearly the better dividend stock given its higher yield and lower payout ratio.

Risk and volatility

HomeStreet has a beta of 1.38, meaning its stock price is 38% more volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 1.18, meaning its stock price is 18 % more volatile than the S&P 500.

Internal and institutional ownership

74.7% of HomeStreet shares are owned by institutional investors. Comparatively, 93.5% of Wintrust Financial shares are held by institutional investors. 4.6% of HomeStreet shares are held by company insiders. Comparatively, 1.5% of Wintrust Financial shares are held by company insiders. Strong institutional ownership is an indication that big money managers, hedge funds and endowments believe a company will outperform the market over the long term.

return

This table compares HomeStreet and Wintrust Financial’s net margins, return on equity, and return on assets.

Earnings and Rating

This table compares HomeStreet and Wintrust Financial’s top revenue, earnings per share and valuation.

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

Analyst recommendations

Here’s a breakdown of current recommendations and price targets for HomeStreet and Wintrust Financial, as reported by MarketBeat.

HomeStreet currently has a consensus price target of $12.25, suggesting a potential downside of 15.17%. Wintrust Financial has a consensus target price of $117.85, suggesting a potential upside of 20.14%. Given Wintrust Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Wintrust Financial is more favorable than HomeStreet.

Summary

Wintrust Financial beats HomeStreet in 14 of the 18 factors compared between the two stocks.

About HomeStreet

(Get a free report)

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank providing commercial, mortgage and consumer/retail banking services in the western United States. The company offers personal and business accounts, savings, interest-bearing negotiable withdrawal orders and money market accounts, as well as certificates of deposit; credit cards; insurance; and treasury management services. Its lending products include commercial real estate (CRE), multifamily, construction and land development, owner-occupied CRE and commercial business loans; and single family, home equity and other loans. In addition, the company offers online, mobile and telephone banking services. It serves small and medium enterprises, real estate investors, professional firms and individuals. The company operates through branches and ATMs. The company was formerly known as the Continental Loan and Loan Company. HomeStreet, Inc. was founded in 1921 and is headquartered in Seattle, Washington.

About Wintrust Financial

(Get a free report)

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance and Wealth Management. The Community Banking segment offers non-interest-bearing deposits, non-intermediate interest-bearing transaction accounts and savings deposits and domestic time deposits; home loans, consumer loans and real estate; storage facilities; and ATM, online and mobile banking and other services. It also engages in the origination and retail purchase of residential mortgage loans; and providing lending, escrow and treasury management services to condominium associations, homeowners and communities, as well as asset-based lending to middle market companies. In addition, this segment provides loan and deposit services to mortgage brokerage companies; loans for restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services mainly to individuals, small and medium-sized enterprises, local government units and institutional customers. The Specialty Finance segment provides commercial and life insurance premium financing for businesses and individuals; Accounts receivable financing, value-added and outsourced administrative services; other specialized financial services; equipment financing through structured loan and leasing products; and financing of property and casualty premiums; as well as payroll data processing, invoicing and cash management services for the temporary staffing industry. The Wealth Management segment provides wealth management services such as trust and investment, asset management, tax-deferred exchanges, securities brokerage and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.

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