Reviewing Cullen/Frost Bankers (NYSE:CFR) and CIT Group (NYSE:CIT)

CIT Group (NYSE:CIT) and Cullen/Frost Bankers (NYSE:CFR) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, profitability, institutional ownership and valuation.

Profitability

This table compares CIT Group and Cullen/Frost Bankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CIT Group -14.45% -0.77% -0.08%
Cullen/Frost Bankers 27.84% 7.38% 0.83%

Insider & Institutional Ownership

92.9% of CIT Group shares are held by institutional investors. Comparatively, 85.3% of Cullen/Frost Bankers shares are held by institutional investors. 0.7% of CIT Group shares are held by insiders. Comparatively, 4.8% of Cullen/Frost Bankers shares are held by 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

CIT Group has a beta of 1.91, suggesting that its share price is 91% more volatile than the S&P 500. Comparatively, Cullen/Frost Bankers has a beta of 1.66, suggesting that its share price is 66% more volatile than the S&P 500.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CIT Group 0 4 2 0 2.33
Cullen/Frost Bankers 6 4 2 0 1.67

CIT Group currently has a consensus target price of $35.17, indicating a potential upside of 85.38%. Cullen/Frost Bankers has a consensus target price of $77.70, indicating a potential upside of 7.83%. Given CIT Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe CIT Group is more favorable than Cullen/Frost Bankers.

Earnings and Valuation

This table compares CIT Group and Cullen/Frost Bankers’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CIT Group $3.29 billion 0.57 $529.90 million $5.06 3.75
Cullen/Frost Bankers $1.50 billion 3.01 $443.60 million $6.84 10.54

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

Dividends

CIT Group pays an annual dividend of $1.40 per share and has a dividend yield of 7.4%. Cullen/Frost Bankers pays an annual dividend of $2.84 per share and has a dividend yield of 3.9%. CIT Group pays out 27.7% of its earnings in the form of a dividend. Cullen/Frost Bankers pays out 41.5% 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. CIT Group has raised its dividend for 3 consecutive years and Cullen/Frost Bankers has raised its dividend for 27 consecutive years. CIT Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

About CIT Group

CIT Group Inc. operates as the holding company for CIT Bank, N.A. that provides banking and related services to commercial and individual customers. The company operates through Commercial Banking and Consumer Banking segments. The Commercial Banking segment offers lending, leasing, and other financial and advisory services primarily to small and middle-market companies; factoring, receivables management products, and secured supply chain financing; equipment leasing and secured financing to railroads and non-rail companies; equipment financing to small businesses. The Consumer Banking segment provides deposits, including checking and savings accounts, money market, and individual retirement accounts; time deposits and certificates of deposit; and offers residential mortgage and small business administration loans, as well as fiduciary services. The company also offers leasing and advisory, and online banking services. It operates through a network of 60 branches located in southern California. CIT Group Inc. was founded in 1908 and is based in New York, New York.

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.

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