VersaBank (NASDAQ:VBNK) & Webster Financial (NYSE:WBS) Head to Head Contrast

VersaBank (NASDAQ:VBNK) and Webster Financial (NYSE:WBS) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Valuation & Earnings

This table compares VersaBank and Webster Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VersaBank	$141.48 million	4.49	$20.32 million	$0.69	28.45
Webster Financial	$2.94 billion	4.27	$1.00 billion	$6.15	12.61

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for VersaBank and Webster Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VersaBank	0	2	1	0	2.33
Webster Financial	1	11	4	0	2.19

VersaBank presently has a consensus target price of $25.00, suggesting a potential upside of 27.36%. Webster Financial has a consensus target price of $74.25, suggesting a potential downside of 4.28%. Given VersaBank’s stronger consensus rating and higher possible upside, research analysts plainly believe VersaBank is more favorable than Webster Financial.

Dividends

VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. Webster Financial pays an annual dividend of $1.60 per share and has a dividend yield of 2.1%. VersaBank pays out 10.1% of its earnings in the form of a dividend. Webster Financial pays out 26.0% 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.

Risk and Volatility

VersaBank has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, Webster Financial has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Institutional and Insider Ownership

56.9% of VersaBank shares are held by institutional investors. Comparatively, 85.6% of Webster Financial shares are held by institutional investors. 5.3% of VersaBank shares are held by company insiders. Comparatively, 0.5% of Webster Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
VersaBank	9.34%	8.32%	0.75%
Webster Financial	22.78%	11.23%	1.23%

Summary

Webster Financial beats VersaBank on 9 of the 16 factors compared between the two stocks.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

About Webster Financial

Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of financial products and services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Consumer Banking. The Commercial Banking segment offers commercial real estate and equipment financing, business banking, asset-based lending, and commercial services; public sector finance; mortgage warehouse financing; sponsor and specialty financing services; credit, deposit, and cash flow management services; and wealth management solutions to business owners and operators, including trust, asset management, financial planning, insurance, retirement, and investment products, as well as treasury management services comprising derivative, treasury, accounts payable, accounts receivable, and trade products and services. This segment also provides commercial services, such as accounts receivable factoring and trade financing, payroll funding, and business process outsourcing. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter benefit services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. The Consumer Banking segment provides consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers; and small business banking products, such as credit, deposit, and cash flow management products to businesses and professional service firms. The company offers online and mobile banking services. Webster Financial Corporation was founded in 1935 and is headquartered in Stamford, Connecticut.