Critical Contrast: Citizens Financial Group (NYSE:CFG) vs. Franklin Financial Services (NASDAQ:FRAF)

Citizens Financial Group (NYSE:CFG) and Franklin Financial Services (NASDAQ:FRAF) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Dividends

Citizens Financial Group pays an annual dividend of $1.84 per share and has a dividend yield of 2.9%. Franklin Financial Services pays an annual dividend of $1.32 per share and has a dividend yield of 2.5%. Citizens Financial Group pays out 51.5% of its earnings in the form of a dividend. Franklin Financial Services pays out 37.7% 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. Franklin Financial Services has raised its dividend for 1 consecutive years.

Volatility and Risk

Citizens Financial Group has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Franklin Financial Services has a beta of -0.08, indicating that its stock price is 108% less volatile than the S&P 500.

Profitability

This table compares Citizens Financial Group and Franklin Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Citizens Financial Group	15.19%	7.89%	0.83%
Franklin Financial Services	12.34%	10.11%	0.69%

Earnings & Valuation

This table compares Citizens Financial Group and Franklin Financial Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Citizens Financial Group	$12.06 billion	2.29	$1.51 billion	$3.57	18.00
Franklin Financial Services	$115.13 million	2.04	$11.10 million	$3.50	14.97

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Citizens Financial Group and Franklin Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Citizens Financial Group	0	2	17	1	2.95
Franklin Financial Services	0	0	1	0	3.00

Citizens Financial Group currently has a consensus price target of $65.68, indicating a potential upside of 2.23%. Given Citizens Financial Group’s higher probable upside, research analysts clearly believe Citizens Financial Group is more favorable than Franklin Financial Services.

Institutional and Insider Ownership

94.9% of Citizens Financial Group shares are held by institutional investors. Comparatively, 24.8% of Franklin Financial Services shares are held by institutional investors. 0.7% of Citizens Financial Group shares are held by insiders. Comparatively, 6.9% of Franklin Financial Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Citizens Financial Group beats Franklin Financial Services on 13 of the 18 factors compared between the two stocks.

About Citizens Financial Group

Citizens Financial Group, Inc. operates as the bank holding company that provides retail and commercial banking products and services to individuals, small businesses, middle-market companies, corporations, and institutions in the United States. The company operates in two segments, Consumer Banking and Commercial Banking. The Consumer Banking segment offers deposit products, mortgage and home equity lending products, credit cards, business loans, wealth management, and investment services; and auto, education, and point-of-sale finance loans, as well as digital deposit products. This segment serves its customers through telephone service centers, as well as through its online and mobile platforms. The Commercial Banking segment provides various financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, and interest rate and commodity risk management solutions, as well as syndicated loans, corporate finance, mergers and acquisitions, and debt and equity capital markets services. This segment serves corporate banking, healthcare, technology, asset finance, franchise finance, leasing, asset-based lending, commercial real estate, mid-corporate, and private equity sponsor industries. The company was formerly known as RBS Citizens Financial Group, Inc. and changed its name to Citizens Financial Group, Inc. in April 2014. Citizens Financial Group, Inc. was founded in 1828 and is headquartered in Providence, Rhode Island.

About Franklin Financial Services

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.