Analyzing Webster Financial (WBS) & Cadence Bancorp (CADE)

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Webster Financial (NYSE:WBS) and Cadence Bancorp (NYSE:CADE) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Institutional and Insider Ownership

91.4% of Webster Financial shares are owned by institutional investors. 1.5% of Webster Financial shares are owned by company insiders. Comparatively, 3.3% of Cadence Bancorp shares are owned 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.

Dividends

Webster Financial pays an annual dividend of $1.32 per share and has a dividend yield of 2.6%. Cadence Bancorp pays an annual dividend of $0.70 per share and has a dividend yield of 3.4%. Webster Financial pays out 35.3% of its earnings in the form of a dividend. Cadence Bancorp pays out 33.8% 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. Webster Financial has raised its dividend for 8 consecutive years. Cadence Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Webster Financial and Cadence Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Webster Financial $1.34 billion 3.56 $360.42 million $3.74 13.81
Cadence Bancorp $607.30 million 2.72 $166.26 million $2.07 9.89

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

Volatility & Risk

Webster Financial has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500. Comparatively, Cadence Bancorp has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Webster Financial and Cadence Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Webster Financial 1 3 3 0 2.29
Cadence Bancorp 0 2 5 1 2.88

Webster Financial currently has a consensus price target of $62.80, suggesting a potential upside of 21.56%. Cadence Bancorp has a consensus price target of $25.63, suggesting a potential upside of 25.12%. Given Cadence Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Cadence Bancorp is more favorable than Webster Financial.

Profitability

This table compares Webster Financial and Cadence Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Webster Financial 26.94% 13.36% 1.30%
Cadence Bancorp 27.38% 12.68% 1.52%

Summary

Cadence Bancorp beats Webster Financial on 10 of the 18 factors compared between the two stocks.

About Webster Financial

Webster Financial Corporation operates as the holding company for Webster Bank, National Association that provides a range of banking, investment, and financial services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Community Banking. The Commercial Banking segment provides lending, deposit, and cash management services to middle market companies; and commercial and industrial lending and leasing, commercial real estate lending, equipment financing, and asset-based lending, as well as treasury and payment services. This segment also offers relationship banking services for high net worth clients, not-for-profit organizations, and business clients with deposit and loan products; and asset management, financial planning, and trust services. The HSA Bank segment offers health savings accounts, health reimbursement accounts, flexible spending accounts, and other financial solutions to employers for the benefit of their employees and individuals. The Community Banking segment offers deposit and fee-based services, residential mortgages, home equity lines/loans, unsecured consumer loans, and credit cards to consumers, as well as investment and securities-related services, including brokerage and investment advice through a strategic partnership with LPL Financial Holdings Inc. This segment also provides credit, deposit, and cash flow management products to businesses and professional service firms. The company also provides telephone and mobile banking services, as well as through its Website. As of February 21, 2019, it operated 157 banking centers and 316 ATMs. Webster Financial Corporation was founded in 1935 and is headquartered in Waterbury, Connecticut.

About Cadence Bancorp

Cadence Bancorporation, a financial holding company, through its subsidiary, Cadence Bank, National Association, provides commercial banking products and services to middle-market commercial businesses, high net worth individuals, business owners, and retail customers in the United States. The company operates through Banking and Financial Services segments. It offers checking, savings, money market, and other deposit accounts. The company also provides commercial and industrial, and commercial and residential real estate loans; other consumer loans, such as home equity, auto, boat, and personal installment loans; and shared national credits. In addition, it offers wealth management and other fiduciary, and private banking services under the Linscomb & Williams and Cadence Trust brands. Further, the company provides life, disability, and long-term care insurance products, as well as buy-sell agreements to retail and commercial customers under the Cadence Investment Services brand through financial consultants and advisors, and third party partners, as well as directly. Additionally, it offers correspondent banking products and services comprising treasury and liquidity management, Fed funds accommodation, wholesale mortgage, and commercial real estate participation services for financial institutions; and payroll and human resources services, payroll cards, and employee health insurance products. The company also provides debit and credit cards; treasury management and merchant services; employee and payroll benefit solutions; and automated clearing house, lock-box, remote deposit capture, foreign exchange, and other treasury services, as well as online, mobile, and telephone banking services. As of December 31, 2018, it operated 66 branch offices in Texas, Alabama, Florida, Mississippi, and Tennessee; and 32 branches throughout Georgia. The company also serves through ATMs and ITMs. Cadence Bancorporation was founded in 1885 and is headquartered in Houston, Texas.

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