First Interstate Bancsystem (NASDAQ:FIBK) and Western Alliance Bancorporation (NYSE:WAL) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, analyst recommendations, dividends and profitability.

Earnings and Valuation

This table compares First Interstate Bancsystem and Western Alliance Bancorporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Interstate Bancsystem $703.90 million 2.57 $181.00 million $3.07 9.02
Western Alliance Bancorporation $1.29 billion 2.26 $499.17 million $4.84 5.88

Western Alliance Bancorporation has higher revenue and earnings than First Interstate Bancsystem. Western Alliance Bancorporation is trading at a lower price-to-earnings ratio than First Interstate Bancsystem, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

First Interstate Bancsystem has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.7, indicating that its share price is 70% more volatile than the S&P 500.

Institutional and Insider Ownership

50.3% of First Interstate Bancsystem shares are held by institutional investors. Comparatively, 84.7% of Western Alliance Bancorporation shares are held by institutional investors. 24.9% of First Interstate Bancsystem shares are held by company insiders. Comparatively, 7.7% of Western Alliance Bancorporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares First Interstate Bancsystem and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Interstate Bancsystem 25.71% 10.16% 1.36%
Western Alliance Bancorporation 38.69% 17.34% 1.95%

Analyst Recommendations

This is a summary of current ratings and recommmendations for First Interstate Bancsystem and Western Alliance Bancorporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Interstate Bancsystem 0 2 1 0 2.33
Western Alliance Bancorporation 0 0 7 0 3.00

First Interstate Bancsystem currently has a consensus target price of $44.50, indicating a potential upside of 60.77%. Western Alliance Bancorporation has a consensus target price of $54.40, indicating a potential upside of 91.01%. Given Western Alliance Bancorporation’s stronger consensus rating and higher possible upside, analysts clearly believe Western Alliance Bancorporation is more favorable than First Interstate Bancsystem.

Dividends

First Interstate Bancsystem pays an annual dividend of $1.36 per share and has a dividend yield of 4.9%. Western Alliance Bancorporation pays an annual dividend of $1.00 per share and has a dividend yield of 3.5%. First Interstate Bancsystem pays out 44.3% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 20.7% 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. First Interstate Bancsystem has raised its dividend for 6 consecutive years. First Interstate Bancsystem is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Western Alliance Bancorporation beats First Interstate Bancsystem on 12 of the 17 factors compared between the two stocks.

About First Interstate Bancsystem

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States. Its deposit products include checking, savings, time, and demand deposits; and repurchase agreements primarily for commercial and municipal depositors. The company's loan portfolio consists of real estate loans, including commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans; commercial loans; and other loans, including fixed and variable rate loans. It also provides a range of trust, employee benefit, investment management, insurance, agency, and custodial services to individuals, businesses, and nonprofit organizations, which include the administration of estates and personal trusts; management of investment accounts for individuals, employee benefit plans, and charitable foundations; and insurance planning. In addition, the company offers Internet and mobile banking services. It serves individuals, businesses, municipalities, and other entities in various industries, including agriculture, construction, energy, healthcare and professional services, education and governmental services, mining, technology, retail and wholesale trade, and tourism. The company operates 147 banking offices located in Idaho, Montana, Oregon, South Dakota, Washington, and Wyoming. First Interstate BancSystem, Inc. was incorporated in 1971 and is headquartered in Billings, Montana.

About Western Alliance Bancorporation

Western Alliance Bancorporation operates as the holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. The company offers deposit products, including checking accounts, savings accounts, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts. It also offers commercial and industrial loan products, such as working capital lines of credit, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as Internet banking, wire transfers, electronic bill payment and presentment, lock box services, courier, and cash management services. Further, it holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. As of December 31, 2018, the company operated 38 branch locations and 11 loan production offices. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.

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