Charter Financial (NASDAQ: CHFN) and United Community Banks (NASDAQ:UCBI) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.
Insider & Institutional Ownership
66.2% of Charter Financial shares are held by institutional investors. Comparatively, 82.7% of United Community Banks shares are held by institutional investors. 12.1% of Charter Financial shares are held by company insiders. Comparatively, 2.2% of United Community Banks 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 & Volatility
Charter Financial has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500. Comparatively, United Community Banks has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.
This table compares Charter Financial and United Community Banks’ net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|United Community Banks
Valuation & Earnings
This table compares Charter Financial and United Community Banks’ revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|United Community Banks
United Community Banks has higher revenue and earnings than Charter Financial. Charter Financial is trading at a lower price-to-earnings ratio than United Community Banks, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and target prices for Charter Financial and United Community Banks, as reported by MarketBeat.com.
||Strong Buy Ratings
|United Community Banks
Charter Financial currently has a consensus target price of $23.00, suggesting a potential upside of 5.80%. United Community Banks has a consensus target price of $31.00, suggesting a potential downside of 6.77%. Given Charter Financial’s higher probable upside, research analysts clearly believe Charter Financial is more favorable than United Community Banks.
Charter Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. United Community Banks pays an annual dividend of $0.48 per share and has a dividend yield of 1.4%. Charter Financial pays out 35.2% of its earnings in the form of a dividend. United Community Banks pays out 51.1% 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. Charter Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
United Community Banks beats Charter Financial on 10 of the 16 factors compared between the two stocks.
Charter Financial Company Profile
Charter Financial Corporation is a savings and loan holding company for CharterBank (the Bank). The Bank is a federally-chartered savings bank. The Bank’s principal business consists of attracting retail deposits from the general public and investing those deposits, together with funds generated from operations, in commercial real estate loans, one- to four-family residential mortgage loans, construction loans and investment securities, commercial business loans, home equity loans and lines of credit, and other consumer loans. The Bank offers a range of community banking services to its customers, including online banking and bill payment services, mobile banking, online cash management, safe deposit box rentals, debit card, and automated teller machine (ATM) card services and the availability of a network of ATMs. As of September 30, 2016, the Company operated 20 branch offices in west-central Georgia, east-central Alabama and the Florida Gulf Coast.
United Community Banks Company Profile
United Community Banks, Inc. (United) is a bank holding company. United conducts its operations through a community-focused operating model of separate community banks, which, as of December 31, 2016, operated at 139 locations throughout the Atlanta-Sandy Springs-Roswell, Georgia, and Gainesville, Georgia metropolitan statistical areas, upstate and coastal South Carolina, north and coastal Georgia, western North Carolina, and east Tennessee. The community banks offer a range of retail and corporate banking services, including checking, savings and time deposit accounts, secured and unsecured loans, wire transfers, brokerage services and other financial services. The Company operates through its subsidiary, United Community Bank, Blairsville, Georgia (the Bank) and Four Oaks Bank & Trust Company. The Bank owns an insurance agency, United Community Insurance Services, Inc., known as United Community Advisory Services, which is a subsidiary of the Bank.
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