Western Alliance Bancorporation (WAL) vs. Heartland Financial USA (HTLF) Critical Review

Heartland Financial USA (NASDAQ: HTLF) and Western Alliance Bancorporation (NYSE:WAL) are both financials companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, valuation, analyst recommendations, profitability, institutional ownership and risk.

Institutional & Insider Ownership

48.8% of Heartland Financial USA shares are owned by institutional investors. Comparatively, 81.9% of Western Alliance Bancorporation shares are owned by institutional investors. 9.0% of Heartland Financial USA shares are owned by company insiders. Comparatively, 8.0% of Western Alliance Bancorporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Heartland Financial USA and Western Alliance Bancorporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heartland Financial USA 0 4 2 0 2.33
Western Alliance Bancorporation 0 0 10 0 3.00

Heartland Financial USA currently has a consensus target price of $56.20, indicating a potential upside of 9.23%. Western Alliance Bancorporation has a consensus target price of $66.85, indicating a potential upside of 15.42%. Given Western Alliance Bancorporation’s stronger consensus rating and higher probable upside, analysts clearly believe Western Alliance Bancorporation is more favorable than Heartland Financial USA.

Profitability

This table compares Heartland Financial USA and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Heartland Financial USA 16.16% 10.02% 0.98%
Western Alliance Bancorporation 36.56% 15.82% 1.72%

Risk and Volatility

Heartland Financial USA has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500.

Earnings & Valuation

This table compares Heartland Financial USA and Western Alliance Bancorporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Heartland Financial USA $465.68 million 3.31 $75.27 million $2.66 19.34
Western Alliance Bancorporation $890.86 million 6.86 $325.49 million $3.10 18.68

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

Dividends

Heartland Financial USA pays an annual dividend of $0.44 per share and has a dividend yield of 0.9%. Western Alliance Bancorporation does not pay a dividend. Heartland Financial USA pays out 16.5% of its earnings in the form of a dividend.

Summary

Western Alliance Bancorporation beats Heartland Financial USA on 13 of the 16 factors compared between the two stocks.

Heartland Financial USA Company Profile

Heartland Financial USA, Inc. (Heartland) is a diversified financial services company engaged in providing banking, mortgage, private client, investment, treasury management, card services, insurance, and consumer finance services to individuals and businesses. Its segments include community and other banking, and retail mortgage banking. Its community and other banking segment is engaged in making loans to, and generating deposits from, individuals and businesses in the markets where Heartland has banks. Its retail mortgage banking segment is engaged in the origination of residential loans and subsequent sale of those loans to investors. The Company conducts its community banking business through independently chartered community banks (collectively, the Bank Subsidiaries). Its securities portfolio consists of United States Government corporations and agencies, mortgage-backed securities and other securities. Its loans include commercial, commercial real estate and consumer loans.

Western Alliance Bancorporation Company Profile

Western Alliance Bancorporation is a bank holding company. The Company provides a range of deposit, lending, treasury management, international banking and online banking products and services through its banking subsidiary, Western Alliance Bank (WAB or the Bank). The Company’s regional segments include Arizona, Nevada, Southern California and Northern California, which provide banking and related services to their respective markets. The operations from the regional segments correspond to the banking divisions, which include Alliance Bank of Arizona (ABA) in Arizona, Bank of Nevada (BON) and First Independent Bank (FIB) in Nevada, Torrey Pines Bank (TPB) in Southern California, and Bridge Bank in Northern California. The Company’s National Business Lines (NBL) segments include HOA Services, Hotel Franchise Finance (HFF), Public & Nonprofit Finance, Technology & Innovation, Other NBLs, which provide specialized banking services to niche markets.

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