Head to Head Review: Wintrust Financial (NASDAQ:WTFC) vs. Prosperity Bancshares (NYSE:PB)

Prosperity Bancshares (NYSE:PB) and Wintrust Financial (NASDAQ:WTFC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Analyst Ratings

This is a breakdown of current ratings and price targets for Prosperity Bancshares and Wintrust Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prosperity Bancshares	1	8	5	0	2.29
Wintrust Financial	0	4	9	0	2.69

Prosperity Bancshares currently has a consensus price target of $78.36, suggesting a potential upside of 7.57%. Wintrust Financial has a consensus price target of $177.77, suggesting a potential upside of 15.34%. Given Wintrust Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Wintrust Financial is more favorable than Prosperity Bancshares.

Dividends

Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.3%. Wintrust Financial pays an annual dividend of $2.20 per share and has a dividend yield of 1.4%. Prosperity Bancshares pays out 41.6% of its earnings in the form of a dividend. Wintrust Financial pays out 17.7% 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. Prosperity Bancshares has raised its dividend for 27 consecutive years and Wintrust Financial has raised its dividend for 12 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prosperity Bancshares	29.95%	7.39%	1.43%
Wintrust Financial	20.72%	13.37%	1.28%

Volatility and Risk

Prosperity Bancshares has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Valuation and Earnings

This table compares Prosperity Bancshares and Wintrust Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prosperity Bancshares	$1.33 billion	5.52	$542.84 million	$5.77	12.63
Wintrust Financial	$4.23 billion	2.46	$823.84 million	$12.45	12.38

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

Insider & Institutional Ownership

80.7% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 93.5% of Wintrust Financial shares are held by institutional investors. 4.0% of Prosperity Bancshares shares are held by company insiders. Comparatively, 1.2% of Wintrust Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Wintrust Financial beats Prosperity Bancshares on 10 of the 17 factors compared between the two stocks.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.

About Wintrust Financial

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-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.