Toronto Dominion Bank (The) (NYSE: TD) and BancorpSouth (NYSE:BXS) are both mid-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitabiliy, dividends and analyst recommendations.

Dividends

Toronto Dominion Bank (The) pays an annual dividend of $1.85 per share and has a dividend yield of 3.6%. BancorpSouth pays an annual dividend of $0.50 per share and has a dividend yield of 1.6%. Toronto Dominion Bank (The) pays out 48.2% of its earnings in the form of a dividend. BancorpSouth pays out 30.9% 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. Toronto Dominion Bank (The) has increased its dividend for 4 consecutive years. Toronto Dominion Bank (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Toronto Dominion Bank (The) and BancorpSouth’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toronto Dominion Bank (The) 22.56% 14.09% 0.82%
BancorpSouth 19.46% 8.74% 1.02%

Analyst Ratings

This is a breakdown of current ratings for Toronto Dominion Bank (The) and BancorpSouth, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toronto Dominion Bank (The) 0 4 6 0 2.60
BancorpSouth 0 8 1 0 2.11

Toronto Dominion Bank (The) currently has a consensus price target of $62.50, suggesting a potential upside of 20.12%. BancorpSouth has a consensus price target of $28.80, suggesting a potential downside of 6.49%. Given Toronto Dominion Bank (The)’s stronger consensus rating and higher probable upside, equities analysts clearly believe Toronto Dominion Bank (The) is more favorable than BancorpSouth.

Insider & Institutional Ownership

52.6% of Toronto Dominion Bank (The) shares are owned by institutional investors. Comparatively, 67.6% of BancorpSouth shares are owned by institutional investors. 2.6% of BancorpSouth shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Toronto Dominion Bank (The) and BancorpSouth’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Toronto Dominion Bank (The) $25.72 billion 3.73 $7.08 billion $3.84 13.55
BancorpSouth $738.08 million 3.81 $147.98 million $1.62 19.01

Toronto Dominion Bank (The) has higher revenue and earnings than BancorpSouth. Toronto Dominion Bank (The) is trading at a lower price-to-earnings ratio than BancorpSouth, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Toronto Dominion Bank (The) has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500. Comparatively, BancorpSouth has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500.

Summary

Toronto Dominion Bank (The) beats BancorpSouth on 10 of the 17 factors compared between the two stocks.

About Toronto Dominion Bank (The)

Toronto-Dominion Bank (the Bank) is a Canada-based bank, which operates in the North America. It is an online financial services firm, with over 10.2 million online and mobile customers. Its segments include Canadian Retail, U.S. Retail, Wholesale Banking and Corporate. The Canadian Retail segment provides a range of financial products and services to customers in the Canadian personal and commercial banking businesses. The U.S. Retail segment consists of its retail and commercial banking operations operating under the brand TD Bank, and wealth management services in the United States. The Wholesale Banking segment provides a range of capital markets, investment banking, and corporate banking products and services, including underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, funding and investment needs of its clients. The Corporate segment provides centralized advice and counsel to its businesses.

About BancorpSouth

BancorpSouth, Inc. is a financial holding company. The Company, through its principal bank subsidiary, BancorpSouth Bank (the Bank), conducts commercial banking and financial services operations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee, Texas and Illinois. The Company’s segments include Community Banking, Insurance Agencies, and General Corporate and Other. Its Community Banking segment provides a range of deposit products, commercial loans and consumer loans. Its Insurance Agencies segment serves as agents in the sale of commercial lines of insurance and full lines of property and casualty, life, health and employee benefits products and services. Its General Corporate and Other segment includes mortgage banking, trust services, credit card activities, investment services and other activities not allocated to the Community Banking or Insurance Agencies segments.

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