Contrasting Cullen/Frost Bankers (CFR) and Meridian Bancorp (EBSB)

Cullen/Frost Bankers (NYSE:CFR) and Meridian Bancorp (NASDAQ:EBSB) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Risk and Volatility

Cullen/Frost Bankers has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Meridian Bancorp has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.



Dividends

Cullen/Frost Bankers pays an annual dividend of $2.68 per share and has a dividend yield of 2.8%. Meridian Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.6%. Cullen/Frost Bankers pays out 38.8% of its earnings in the form of a dividend. Meridian Bancorp pays out 26.4% 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. Cullen/Frost Bankers has increased its dividend for 26 consecutive years and Meridian Bancorp has increased its dividend for 3 consecutive years. Cullen/Frost Bankers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Cullen/Frost Bankers and Meridian Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cullen/Frost Bankers $1.40 billion 4.36 $454.91 million $6.90 14.05
Meridian Bancorp $236.68 million 3.91 $55.77 million $1.06 16.32

Cullen/Frost Bankers has higher revenue and earnings than Meridian Bancorp. Cullen/Frost Bankers is trading at a lower price-to-earnings ratio than Meridian Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cullen/Frost Bankers and Meridian Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cullen/Frost Bankers 32.16% 14.30% 1.48%
Meridian Bancorp 23.48% 8.70% 0.98%

Analyst Ratings

This is a breakdown of recent recommendations for Cullen/Frost Bankers and Meridian Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cullen/Frost Bankers 1 5 2 0 2.13
Meridian Bancorp 0 1 0 0 2.00

Cullen/Frost Bankers currently has a consensus price target of $103.50, suggesting a potential upside of 6.77%. Meridian Bancorp has a consensus price target of $15.00, suggesting a potential downside of 13.29%. Given Cullen/Frost Bankers’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Cullen/Frost Bankers is more favorable than Meridian Bancorp.

Insider and Institutional Ownership

82.3% of Cullen/Frost Bankers shares are held by institutional investors. Comparatively, 64.3% of Meridian Bancorp shares are held by institutional investors. 4.8% of Cullen/Frost Bankers shares are held by insiders. Comparatively, 4.8% of Meridian Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Cullen/Frost Bankers beats Meridian Bancorp on 15 of the 17 factors compared between the two stocks.

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. operates as the holding company for Frost Bank that offers commercial and consumer banking services in Texas. It operates in two segments, Banking and Frost Wealth Advisors. The company offers commercial banking services to corporations and other business clients, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; commercial leasing; and treasury management services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds, and foreign exchange services. Further, it acts as a correspondent for approximately 194 financial institutions; offers trust, investment, agency, and custodial services for individual and corporate clients; provides capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and supports international business activities. Additionally, the company offers insurance and securities brokerage services; holds securities for investment purposes; and provides loans to qualified borrowers, as well as investment management services to Frost-managed mutual funds, institutions, and individuals. It operates approximately 131 financial centers and 1,200 ATMs. The company serves the energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. Cullen/Frost Bankers, Inc. was founded in 1868 and is headquartered in San Antonio, Texas.

About Meridian Bancorp

Meridian Bancorp, Inc. operates as the holding company for East Boston Savings Bank that provides various financial products and services for individuals and businesses primarily in Suffolk, Norfolk, Middlesex and Essex Counties, Massachusetts. The company accepts various deposit products, including non-interest-bearing demand deposits, such as checking accounts; interest-bearing demand accounts comprising NOW and money market accounts; savings accounts; and certificates of deposits, as well as commercial checking accounts. Its loan portfolio includes commercial real estate loans, which are secured by properties used for business purposes, such as office buildings, industrial facilities, and retail facilities; one- to four-family residential loans comprising mortgage loans that enable borrowers to purchase or refinance existing homes; multi-family real estate loans; construction loans; commercial and industrial loans; home equity lines of credit; and consumer loans that include automobile loans, loans secured by savings or certificate accounts, credit builders, and annuity and overdraft loans. In addition, the company offers non-deposit financial products, which comprise mutual funds, annuities, stocks, and bonds through a third-party broker-dealer; and long-term care insurance products. Further, it is also involved in the securities transactions business; and holding foreclosed real estate properties. The company operates 37 full-service locations, as well as 1 mobile branch and 3 loan centers. Meridian Bancorp, Inc. was founded in 1848 and is headquartered in Peabody, Massachusetts.

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