Union Bankshares Corporation (NASDAQ: UBSH) and SunTrust Banks (NYSE:STI) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitabiliy.

Profitability

This table compares Union Bankshares Corporation and SunTrust Banks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Union Bankshares Corporation 20.42% 7.97% 0.94%
SunTrust Banks 20.51% 8.48% 0.93%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Union Bankshares Corporation and SunTrust Banks, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Union Bankshares Corporation 0 1 2 1 3.00
SunTrust Banks 1 11 10 0 2.41

Union Bankshares Corporation presently has a consensus price target of $38.50, suggesting a potential upside of 20.84%. SunTrust Banks has a consensus price target of $59.47, suggesting a potential upside of 5.40%. Given Union Bankshares Corporation’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Union Bankshares Corporation is more favorable than SunTrust Banks.

Earnings and Valuation

This table compares Union Bankshares Corporation and SunTrust Banks’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Union Bankshares Corporation $336.61 million 4.14 $78.67 million $1.80 17.70
SunTrust Banks $8.39 billion 3.25 $1.81 billion $3.75 15.05

SunTrust Banks has higher revenue and earnings than Union Bankshares Corporation. SunTrust Banks is trading at a lower price-to-earnings ratio than Union Bankshares Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Union Bankshares Corporation has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, SunTrust Banks has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.

Dividends

Union Bankshares Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 2.5%. SunTrust Banks pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. Union Bankshares Corporation pays out 44.4% of its earnings in the form of a dividend. SunTrust Banks pays out 27.7% 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. SunTrust Banks has raised its dividend for 4 consecutive years.

Institutional & Insider Ownership

60.6% of Union Bankshares Corporation shares are owned by institutional investors. Comparatively, 82.1% of SunTrust Banks shares are owned by institutional investors. 2.2% of Union Bankshares Corporation shares are owned by insiders. Comparatively, 0.6% of SunTrust Banks shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

SunTrust Banks beats Union Bankshares Corporation on 10 of the 18 factors compared between the two stocks.

About Union Bankshares Corporation

Union Bankshares Corporation is a financial holding company and bank holding company. The Company operates through two segments: a community bank segment and mortgage loan origination business segment. The Company offers financial services through its community bank subsidiary, Union Bank & Trust (the Bank) and three non-bank financial services affiliates. The Company’s non-bank financial services affiliates include Union Mortgage Group, Inc. (UMG), Union Insurance Group, LLC and Old Dominion Capital Management, Inc. The community bank segment included one subsidiary bank, which provided loan, deposit, investment, and trust services to retail and commercial customers throughout its 114 retail locations in Virginia, as of December 31, 2016. The mortgage segment includes UMG, which provides a range of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area.

About SunTrust Banks

SunTrust Banks, Inc. is a provider of financial services. The Company’s principal subsidiary is SunTrust Bank (the Bank). The Company’s business segments include Consumer Banking and Private Wealth Management, Wholesale Banking, Mortgage Banking and Corporate Other. As of December 31, 2016, the Consumer Banking and Private Wealth Management segment consisted of three primary businesses: Consumer Banking, Consumer Lending and Private Wealth Management. The Wholesale Banking segment includes the operations of the Corporate and investment banking (CIB), Commercial and Business Banking, Commercial Real Estate, and Treasury and Payment Solutions businesses. The Mortgage Banking segment offers residential mortgage products nationally through its retail and correspondent channels, the Internet (www.suntrust.com) and by telephone. The Bank provides clients with a selection of full-, self- and assisted-service channels, including branch, call center, Teller Connect machines, mobile and tablet.

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