Critical Contrast: Pinnacle Financial Partners (NASDAQ:PNFP) and Community Bank System (NYSE:CBU)

Pinnacle Financial Partners (NASDAQ:PNFP) and Community Bank System (NYSE:CBU) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Dividends

Pinnacle Financial Partners pays an annual dividend of $0.88 per share and has a dividend yield of 0.9%. Community Bank System pays an annual dividend of $1.84 per share and has a dividend yield of 3.1%. Pinnacle Financial Partners pays out 12.6% of its earnings in the form of a dividend. Community Bank System pays out 57.9% 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. Community Bank System has increased its dividend for 33 consecutive years. Community Bank System is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Pinnacle Financial Partners has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, Community Bank System has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Insider & Institutional Ownership

87.4% of Pinnacle Financial Partners shares are held by institutional investors. Comparatively, 73.8% of Community Bank System shares are held by institutional investors. 1.9% of Pinnacle Financial Partners shares are held by company insiders. Comparatively, 1.9% of Community Bank System shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Pinnacle Financial Partners and Community Bank System’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle Financial Partners	13.93%	8.97%	1.08%
Community Bank System	15.90%	8.94%	0.94%

Earnings and Valuation

This table compares Pinnacle Financial Partners and Community Bank System’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Financial Partners	$2.79 billion	2.66	$562.15 million	$6.99	13.75
Community Bank System	$713.41 million	4.35	$131.92 million	$3.18	18.51

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Pinnacle Financial Partners and Community Bank System, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Financial Partners	0	4	6	0	2.60
Community Bank System	1	2	0	0	1.67

Pinnacle Financial Partners currently has a consensus price target of $99.00, suggesting a potential upside of 3.00%. Community Bank System has a consensus price target of $47.67, suggesting a potential downside of 19.03%. Given Pinnacle Financial Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Pinnacle Financial Partners is more favorable than Community Bank System.

Summary

Pinnacle Financial Partners beats Community Bank System on 11 of the 17 factors compared between the two stocks.

About Pinnacle Financial Partners

Pinnacle Financial Partners, Inc., together with its subsidiaries, operates as the bank holding company for Pinnacle Bank that provides various banking products and services to individuals, businesses, and professional entities in the United States. The company accepts various deposits, including savings, noninterest-bearing and interest-bearing checking, money market, and certificate of deposit accounts; and provides treasury management services, which includes online wire origination, enhanced ACH origination services, positive pay, zero balance and sweep accounts, automated bill pay services, electronic receivables processing, lockbox processing, and merchant card acceptance services. It offers equipment and working capital loans; commercial real estate loans comprising investment properties and business loans; secured and unsecured loans, such as installment and term, lines of credit, and residential first mortgage, as well as home equity loans and home equity lines of credit; and credit cards for consumers and businesses. The company also provides investment products; brokerage and investment advisory programs; and fiduciary and investment services, such as personal trust, investment management, estate administration, endowments, foundations, individual retirement accounts, escrow services, and custody. In addition, it offers insurance agency services primarily in the property and casualty area; merger and acquisition advisory services; and private debt, equity and mezzanine, and other middle-market advisory services. Further, the company provides telephone and online banking, mobile banking, debit and credit cards, direct deposit and remote deposit capture, mobile deposit option, automated teller machine, and cash management services. Pinnacle Financial Partners, Inc. was incorporated in 2000 and is headquartered in Nashville, Tennessee.

About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and other financial services to retail, commercial, institutional, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as interest and noninterest -bearing checking, savings, and money market deposit accounts, as well as time deposits. It also provides loans, including consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; paycheck protection program loans; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and check credit lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory; cash management, investment, and treasury services; asset management services; and employee benefit services, as well as operates as a full-service insurance agency that provides personal and commercial lines of insurance, and other risk management products and services. Further, it offers contribution plan administration, employee benefit trust, collective investment fund, retirement plan administration and benefit consulting, fund administration, transfer agency, actuarial and benefit consulting, and health and welfare consulting services; and act as an investor in residential and commercial real estate activities. Additionally, the company offers wealth management, retirement planning, higher educational planning, fiduciary, risk management, trust, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and insurance and advisory products, as well as master recordkeeping services. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.