Wells Fargo & Co (NYSE:WFC) and Sterling Bancorp (STL) Financial Contrast

Wells Fargo & Co (NYSE:WFC) and Sterling Bancorp (NYSE:STL) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitability, valuation and institutional ownership.

Institutional & Insider Ownership

71.4% of Wells Fargo & Co shares are held by institutional investors. Comparatively, 93.6% of Sterling Bancorp shares are held by institutional investors. 0.1% of Wells Fargo & Co shares are held by company insiders. Comparatively, 2.1% of Sterling Bancorp shares are held by company 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.

Risk and Volatility

Wells Fargo & Co has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500. Comparatively, Sterling Bancorp has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Earnings and Valuation

This table compares Wells Fargo & Co and Sterling Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Wells Fargo & Co $101.06 billion 2.43 $22.39 billion $4.38 11.50
Sterling Bancorp $1.31 billion 3.19 $447.25 million $2.00 9.84

Wells Fargo & Co has higher revenue and earnings than Sterling Bancorp. Sterling Bancorp is trading at a lower price-to-earnings ratio than Wells Fargo & Co, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Wells Fargo & Co and Sterling Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wells Fargo & Co 22.95% 13.34% 1.25%
Sterling Bancorp 33.95% 10.54% 1.43%

Dividends

Wells Fargo & Co pays an annual dividend of $1.80 per share and has a dividend yield of 3.6%. Sterling Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. Wells Fargo & Co pays out 41.1% of its earnings in the form of a dividend. Sterling Bancorp pays out 14.0% 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. Wells Fargo & Co has raised its dividend for 7 consecutive years. Wells Fargo & Co is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Wells Fargo & Co and Sterling Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wells Fargo & Co 0 7 11 0 2.61
Sterling Bancorp 0 1 4 0 2.80

Wells Fargo & Co presently has a consensus target price of $61.70, suggesting a potential upside of 22.54%. Sterling Bancorp has a consensus target price of $28.00, suggesting a potential upside of 42.35%. Given Sterling Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Sterling Bancorp is more favorable than Wells Fargo & Co.

Summary

Sterling Bancorp beats Wells Fargo & Co on 9 of the 17 factors compared between the two stocks.

About Wells Fargo & Co

Wells Fargo & Company, a diversified financial services company, provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. The company's Community Banking segment offers checking and savings accounts; credit and debit cards; and automobile, student, mortgage, home equity, and small business loans. Its Wholesale Banking segment offers commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, international trade facilities, trade financing, collection, foreign exchange, treasury management, merchant payment processing, institutional fixed-income sales, commodity and equity risk management, corporate trust fiduciary and agency, and investment banking services, as well as online/electronic products. This segment also provides construction, and land acquisition and development loans; secured and unsecured lines of credit; interim financing arrangements; rehabilitation loans; affordable housing loans and letters of credit; loans for securitization; and real estate and mortgage brokerage services. The company's Wealth and Investment Management segment offers financial planning, private banking, credit, and investment management and fiduciary services, as well as retirement and trust services. As of February 7, 2019, it operated through 7,800 locations, 13,000 ATMs, and the Internet and mobile banking, as well as has offices in 37 countries and territories. Wells Fargo & Company was founded in 1852 and is headquartered in San Francisco, California.

About Sterling Bancorp

Sterling Bancorp operates as the bank holding company for Sterling National Bank that provides various banking products and services to commercial, consumer, and municipal clients in the United States. The company accepts deposit products, including checking, savings, money market, time, and interest and non-interest bearing demand deposits, as well as certificates of deposit and mortgage escrow funds. It originates various loans that comprise residential and commercial mortgage loans; commercial and industrial, asset-based, payroll finance, warehouse, factored receivables, equipment finance, public sector, and commercial real estate and multi-family loans; consumer loans, such as homeowner loans, home equity lines of credit, new and used automobile loans, and personal unsecured loans; and acquisition, development, and construction loans. In addition, the company engages in the third-party provider to sell mutual funds and annuities; and provision of annuity and wealth management products. As of December 31, 2018, it operated 106 full-service retail and commercial financial centers, which comprise 24 offices are located in Nassau County, 22 in Suffolk County, 14 in Queens County, 12 in Westchester County, 11 in Kings County, 8 in Rockland County, 6 in Orange County, 3 in New York City, and 2 in Bronx County, as well as 1 office each in Sullivan, Ulster, and Putnam Counties in New York; and 1 office in Bergen County, New Jersey. The company was founded in 1888 and is based in Montebello, New York.

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