Cadence Bancorp (NYSE: STI) and SunTrust Banks (NYSE:STI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Cadence Bancorp and SunTrust Banks, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cadence Bancorp 0 2 2 1 2.80
SunTrust Banks 1 13 13 0 2.44

Cadence Bancorp presently has a consensus target price of $31.20, indicating a potential upside of 15.34%. SunTrust Banks has a consensus target price of $72.57, indicating a potential upside of 6.22%. Given Cadence Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Cadence Bancorp is more favorable than SunTrust Banks.

Valuation & Earnings

This table compares Cadence Bancorp and SunTrust Banks’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cadence Bancorp $430.78 million 5.25 $102.35 million $1.48 18.28
SunTrust Banks $9.74 billion 3.23 $2.27 billion $4.04 16.91

SunTrust Banks has higher revenue and earnings than Cadence Bancorp. SunTrust Banks is trading at a lower price-to-earnings ratio than Cadence Bancorp, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

67.7% of Cadence Bancorp shares are held by institutional investors. Comparatively, 83.8% of SunTrust Banks shares are held by institutional investors. 0.1% of Cadence Bancorp shares are held by insiders. Comparatively, 0.5% of SunTrust Banks shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Cadence Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 2.2%. SunTrust Banks pays an annual dividend of $2.00 per share and has a dividend yield of 2.9%. Cadence Bancorp pays out 40.5% of its earnings in the form of a dividend. SunTrust Banks pays out 49.5% 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. SunTrust Banks has raised its dividend for 5 consecutive years. SunTrust Banks is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Cadence Bancorp and SunTrust Banks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cadence Bancorp 24.49% 11.24% 1.40%
SunTrust Banks 26.41% 10.94% 1.19%

Risk and Volatility

Cadence Bancorp has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, SunTrust Banks has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.

Summary

SunTrust Banks beats Cadence Bancorp on 10 of the 18 factors compared between the two stocks.

Cadence Bancorp Company Profile

Cadence Bancorporation operates as the bank holding company for Cadence Bank, N.A. that provides commercial banking products and services to businesses, high net worth individuals, business owners, and retail customers in the United States. The company operates through Banking and Financial Services segments. It offers various deposit products, including checking, savings, money market, and other deposit accounts. The company also provides commercial and industrial, and residential and commercial real estate loans; other consumer loans, such as home equity, auto, boat, and personal installment loans; and shared national credits. In addition, it offers wealth management, and other fiduciary and private banking services under the Linscomb & Williams and Cadence Trust brands. Further, the company provides life, disability, long-term care, homeowner's, property and casualty, and key person insurance products, as well as buy-sell agreements to retail customers; and business owner, commercial vehicle, property and liability, workers compensation, and specialty liability policies to commercial customers under the Cadence Insurance Services and Cadence Investment Services brands through financial consultants and advisors, and third party partners, as well as directly. Additionally, it offers various financial services comprising debit and credit cards; treasury management and merchant services; employee and payroll benefit solutions; automated clearing house, lock-box, and remote deposit capture services; international trade finance; and international trade, foreign exchange, and other treasury services, as well as online, mobile, and telephone banking services. As of December 31, 2017, it operated 63 full-service and 2 drive-thru branches in Alabama, Florida, Texas, Mississippi, and Tennessee, as well as 78 ATMs and 9 ITMs. The company was founded in 1885 and is headquartered in Houston, Texas. Cadence Bancorporation is a subsidiary of Cadence Bancorp, LLC.

SunTrust Banks Company Profile

SunTrust Banks, Inc. operates as the holding company for SunTrust Bank that provides various financial services for consumers, businesses, corporations, and institutions in the United States. It operates through two segments, Consumer and Wholesale. The Consumer segment provides deposits and payments; home equity and personal credit lines; auto, student, and other lending products; credit cards; discount/online and full-service brokerage products; professional investment advisory products and services; and trust services, as well as family office solutions. This segment also offers residential mortgage products in the secondary market. The Wholesale segment provides capital markets solutions, including advisory, capital raising, and financial risk management, as well as lease financing solutions; cash management services and auto dealer financing solutions; and construction, mini-perm, and permanent real estate financing, as well as tailored financing and equity investment solutions. This segment also offers treasury and payment solutions, such as operating various electronic and paper payment types, which comprise card, wire transfer, automated clearing house, check, and cash; and provides services clients to manage their accounts online. The company offers its products and services through a network of traditional and in-store branches, automated teller machines, Internet, mobile, and telephone banking channels. As of December 31, 2017, it operated 1,268 full-service banking offices located in Florida, Georgia, Virginia, North Carolina, Tennessee, Maryland, South Carolina, and the District of Columbia. SunTrust Banks, Inc. was founded in 1891 and is headquartered in Atlanta, Georgia.

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