Trustmark (NASDAQ: TRMK) and Financial Institutions (NASDAQ:FISI) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.

Dividends

Trustmark pays an annual dividend of $0.92 per share and has a dividend yield of 2.9%. Financial Institutions pays an annual dividend of $0.88 per share and has a dividend yield of 2.9%. Trustmark pays out 59.4% of its earnings in the form of a dividend. Financial Institutions pays out 43.8% 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. Financial Institutions is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Trustmark and Financial Institutions’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trustmark $654.24 million 3.33 $105.63 million $1.55 20.75
Financial Institutions $150.99 million 3.17 $31.93 million $2.01 15.25

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Trustmark and Financial Institutions, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trustmark 0 5 0 0 2.00
Financial Institutions 0 2 1 0 2.33

Trustmark currently has a consensus target price of $35.00, indicating a potential upside of 8.80%. Financial Institutions has a consensus target price of $32.25, indicating a potential upside of 5.22%. Given Trustmark’s higher possible upside, analysts clearly believe Trustmark is more favorable than Financial Institutions.

Institutional & Insider Ownership

62.6% of Trustmark shares are held by institutional investors. Comparatively, 69.2% of Financial Institutions shares are held by institutional investors. 1.4% of Trustmark shares are held by insiders. Comparatively, 5.5% of Financial Institutions shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Trustmark has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500. Comparatively, Financial Institutions has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.

Profitability

This table compares Trustmark and Financial Institutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trustmark 16.15% 8.35% 0.95%
Financial Institutions 19.46% 9.66% 0.81%

Summary

Financial Institutions beats Trustmark on 10 of the 16 factors compared between the two stocks.

About Trustmark

Trustmark Corporation is a bank holding company. The Company’s principal subsidiary is Trustmark National Bank (TNB). Through TNB and its subsidiaries, the Company operates as a financial services company providing banking and other financial solutions. It operates through three segments: General Banking, Wealth Management and Insurance. The General Banking Division is responsible for all traditional banking products and services, including loans and deposits. The Wealth Management Division provides customized solutions for customers by integrating financial services with traditional banking products and services, such as money management, full-service brokerage, financial planning, personal and institutional trust and retirement services. Through Fisher Brown Bottrell Insurance, Inc. (FBBI), a subsidiary of TNB, the Insurance Division provides a range of retail insurance products, including commercial risk management products, bonding, group benefits and personal lines coverage.

About Financial Institutions

Financial Institutions, Inc. is a financial holding company. The Company conducts its business through its subsidiaries: Five Star Bank (the Bank), a New York chartered bank; Scott Danahy Naylon, LLC (SDN), a full service insurance agency, and Courier Capital, LLC (Courier Capital), an investment advisory and wealth management company. The Company operates through two segments: Banking and Non-Banking. The Banking segment includes all of the Company’s retail and commercial banking operations. The Non-Banking segment includes the activities of SDN and Courier Capital. The Company offers a range of banking and related financial services to consumer, commercial and municipal customers through its bank and nonbank subsidiaries. The Company’s indirect lending network includes relationships with franchised automobile dealers in Western and Central New York, the Capital District of New York and Northern and Central Pennsylvania.

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