Critical Review: Guaranty Bancorp (GBNK) & Wintrust Financial (WTFC)

Guaranty Bancorp (NASDAQ: WTFC) and Wintrust Financial (NASDAQ:WTFC) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, risk, earnings, profitability, valuation and analyst recommendations.

Volatility & Risk

Guaranty Bancorp has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Earnings and Valuation

This table compares Guaranty Bancorp and Wintrust Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Guaranty Bancorp $159.75 million 5.45 $38.62 million $1.53 19.41
Wintrust Financial $1.27 billion 3.94 $257.68 million $4.40 20.13

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

Institutional & Insider Ownership

73.5% of Guaranty Bancorp shares are owned by institutional investors. Comparatively, 88.7% of Wintrust Financial shares are owned by institutional investors. 8.4% of Guaranty Bancorp shares are owned by company insiders. Comparatively, 1.6% of Wintrust Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Guaranty Bancorp 26.57% 12.61% 1.38%
Wintrust Financial 22.07% 10.62% 1.08%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Guaranty Bancorp and Wintrust Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Guaranty Bancorp 0 2 1 0 2.33
Wintrust Financial 0 6 2 0 2.25

Guaranty Bancorp currently has a consensus price target of $34.17, indicating a potential upside of 15.04%. Wintrust Financial has a consensus price target of $94.25, indicating a potential upside of 6.41%. Given Guaranty Bancorp’s stronger consensus rating and higher possible upside, research analysts clearly believe Guaranty Bancorp is more favorable than Wintrust Financial.

Dividends

Guaranty Bancorp pays an annual dividend of $0.65 per share and has a dividend yield of 2.2%. Wintrust Financial pays an annual dividend of $0.76 per share and has a dividend yield of 0.9%. Guaranty Bancorp pays out 42.5% of its earnings in the form of a dividend. Wintrust Financial pays out 17.3% 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. Guaranty Bancorp has raised its dividend for 4 consecutive years and Wintrust Financial has raised its dividend for 4 consecutive years.

Summary

Guaranty Bancorp beats Wintrust Financial on 9 of the 16 factors compared between the two stocks.

About Guaranty Bancorp

Guaranty Bancorp operates as the bank holding company for Guaranty Bank and Trust Company that provides various banking and other financial services to consumers, and small to medium-sized businesses. The company accepts deposit products, such as demand, interest-bearing demand, NOW, money market, IRA, and time deposits, and savings accounts, as well as certificates of deposit. It also offers loan products, including commercial, commercial and residential real estate, construction, and small business administration loans, as well as installment loans to individuals and other consumer loans that include overdraft protection, lines of credit, and other consumer loans. In addition, the company provides wealth management services comprising private banking, investment management, and trust services. As of December 31, 2017, it operated 32 branches located in Colorado's Front Range consisting of the Denver metropolitan area; and an investment management firms. The company was formerly known as Centennial Bank Holdings, Inc. and changed its name to Guaranty Bancorp in 2008. Guaranty Bancorp was incorporated in 2004 and is headquartered in Denver, Colorado.

About Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company in the Chicago metropolitan area, southern Wisconsin, and northwest Indiana. 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), Internet banking, and other services. It also engages in the origination and purchase of residential mortgages for sale into the secondary market; and provision of lending, deposits, and cash 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 customers. The Specialty Finance segment offers commercial and life insurance premiums for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; and other specialty finance services, as well as data processing of payrolls, billing, and cash management services to temporary staffing service clients. The Wealth Management segment provides trust and investment, asset management, securities brokerage, and retirement plan services. As of December 31, 2017, the company had approximately 157 banking facilities and 212 ATMs. Wintrust Financial Corporation was founded in 1992 and is headquartered in Rosemont, Illinois.

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