Head to Head Analysis: TowneBank (NASDAQ:TOWN) vs. Wintrust Financial (NASDAQ:WTFC)

TowneBank (NASDAQ:TOWN) and Wintrust Financial (NASDAQ:WTFC) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Valuation and Earnings

This table compares TowneBank and Wintrust Financial’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TowneBank	$671.45 million	3.66	$153.71 million	$2.01	16.29
Wintrust Financial	$3.33 billion	2.04	$622.63 million	$9.67	10.57

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

Dividends

TowneBank pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. Wintrust Financial pays an annual dividend of $1.80 per share and has a dividend yield of 1.8%. TowneBank pays out 49.8% of its earnings in the form of a dividend. Wintrust Financial pays out 18.6% 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. TowneBank has increased its dividend for 12 consecutive years and Wintrust Financial has increased its dividend for 11 consecutive years. TowneBank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

56.0% of TowneBank shares are held by institutional investors. Comparatively, 93.5% of Wintrust Financial shares are held by institutional investors. 8.1% of TowneBank shares are held by company insiders. Comparatively, 1.5% of Wintrust Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

TowneBank has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for TowneBank and Wintrust Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TowneBank	0	2	1	0	2.33
Wintrust Financial	0	2	10	1	2.92

TowneBank currently has a consensus price target of $33.50, indicating a potential upside of 2.29%. Wintrust Financial has a consensus price target of $117.85, indicating a potential upside of 15.28%. Given Wintrust Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Wintrust Financial is more favorable than TowneBank.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TowneBank	15.33%	7.61%	0.92%
Wintrust Financial	17.02%	12.71%	1.10%

Summary

Wintrust Financial beats TowneBank on 13 of the 18 factors compared between the two stocks.

About TowneBank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.

About Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. 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), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury 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 clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.