Analyzing Synovus Financial (NYSE:SNV) & First Midwest Bancorp (NYSE:FMBI)

First Midwest Bancorp (NASDAQ:FMBI) and Synovus Financial (NYSE:SNV) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Insider & Institutional Ownership

81.5% of First Midwest Bancorp shares are held by institutional investors. Comparatively, 85.0% of Synovus Financial shares are held by institutional investors. 1.1% of First Midwest Bancorp shares are held by company insiders. Comparatively, 1.0% of Synovus Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for First Midwest Bancorp and Synovus Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Midwest Bancorp 0 2 3 0 2.60
Synovus Financial 0 1 13 1 3.00

First Midwest Bancorp presently has a consensus price target of $23.67, suggesting a potential upside of 8.26%. Synovus Financial has a consensus price target of $42.29, suggesting a potential upside of 12.23%. Given Synovus Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Synovus Financial is more favorable than First Midwest Bancorp.

Valuation and Earnings

This table compares First Midwest Bancorp and Synovus Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Midwest Bancorp $727.08 million 3.31 $157.87 million $1.67 13.09
Synovus Financial $1.62 billion 3.40 $428.48 million $3.64 10.35

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

Dividends

First Midwest Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 2.6%. Synovus Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.2%. First Midwest Bancorp pays out 33.5% of its earnings in the form of a dividend. Synovus Financial pays out 33.0% 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. Synovus Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

First Midwest Bancorp has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, Synovus Financial has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Profitability

This table compares First Midwest Bancorp and Synovus Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Midwest Bancorp 22.55% 9.51% 1.26%
Synovus Financial 23.22% 14.43% 1.34%

Summary

Synovus Financial beats First Midwest Bancorp on 15 of the 17 factors compared between the two stocks.

First Midwest Bancorp Company Profile

First Midwest Bancorp, Inc. operates as the bank holding company for First Midwest Bank that provides various banking products and services. The company accepts checking, NOW, money market, and savings accounts, as well as various types of short-term and long-term certificates of deposit. Its loan products include working capital loans; accounts receivable financing; inventory and equipment financing; sector-based lending, including healthcare, asset-based lending, structured finance, and syndications; agricultural loans; and mortgages, home equity lines and loans, personal loans, specialty loans, and consumer secured loans, as well as funding for the construction, purchase, refinance, or improvement of commercial real estate properties. In addition, the company offers treasury management products and services comprising automated clearing house collection, lockbox, remote deposit capture, and financial electronic data interchange; wire transfer, account reconciliation, controlled disbursement, direct deposit, and positive pay services; information reporting services; corporate credit cards; and liquidity management, fraud prevention, and merchant services. Further, it provides fiduciary and executor, financial planning, investment advisory, employee benefit plan, and private banking services to corporate and public retirement plans, foundations and endowments, high net worth individuals, and multi-employer trust funds. Additionally, the company offers debit and automated teller machine, and credit cards; Internet and mobile, and telephone banking services; and financial education services. It serves commercial and industrial, commercial real estate, municipal, and consumer customers. The company operates 120 locations and 177 automated teller machines in greater Chicago metropolitan area, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest Bancorp, Inc. was incorporated in 1982 and is headquartered in Chicago, Illinois.

Synovus Financial Company Profile

Synovus Financial Corp. operates as the bank holding company for Synovus Bank that provides various financial products and services. It offers integrated financial services, including commercial and retail banking, financial management, insurance, and mortgage services. The company's commercial banking services comprise treasury management, asset management, capital market, and institutional trust services, as well as commercial, financial, and real estate loans. Its retail banking services consist of accepting customary types of demand and savings deposits accounts; mortgage, installment, and other consumer loans; investment and brokerage services; safe deposit services; automated banking services; automated fund transfers; Internet-based banking services; and bank credit card services, including Visa and MasterCard services. The company also offers various other financial services, including portfolio management for fixed-income securities, investment banking, execution of securities transactions as a broker/dealer, asset management and financial planning services, and individual investment advice on equity and other securities, as well as trust services. As of December 31, 2018, it operated through 249 branches and 335 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Financial Corp. was founded in 1888 and is headquartered in Columbus, Georgia.

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