United Community Banks (NYSE:UCB) and F.N.B. (NYSE:FNB) Critical Review

United Community Banks (NYSE:UCB) and F.N.B. (NYSE:FNB) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, dividends, profitability, earnings and risk.

Analyst Recommendations

This is a summary of current ratings and recommmendations for United Community Banks and F.N.B., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	3	4	1	2.75
F.N.B.	0	2	5	0	2.71

United Community Banks currently has a consensus target price of $39.60, suggesting a potential upside of 11.70%. F.N.B. has a consensus target price of $20.33, suggesting a potential upside of 15.22%. Given F.N.B.’s higher possible upside, analysts clearly believe F.N.B. is more favorable than United Community Banks.

Valuation & Earnings

This table compares United Community Banks and F.N.B.”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$1.54 billion	2.78	$328.10 million	$3.04	11.66
F.N.B.	$2.69 billion	2.31	$565.00 million	$1.68	10.50

F.N.B. has higher revenue and earnings than United Community Banks. F.N.B. is trading at a lower price-to-earnings ratio than United Community Banks, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

United Community Banks has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, F.N.B. has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.

Insider and Institutional Ownership

82.3% of United Community Banks shares are owned by institutional investors. Comparatively, 79.2% of F.N.B. shares are owned by institutional investors. 0.5% of United Community Banks shares are owned by company insiders. Comparatively, 1.5% of F.N.B. shares are owned 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 United Community Banks and F.N.B.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	24.43%	9.61%	1.24%
F.N.B.	22.29%	9.10%	1.22%

Dividends

United Community Banks pays an annual dividend of $1.04 per share and has a dividend yield of 2.9%. F.N.B. pays an annual dividend of $0.52 per share and has a dividend yield of 2.9%. United Community Banks pays out 34.2% of its earnings in the form of a dividend. F.N.B. pays out 31.0% 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. F.N.B. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

United Community Banks beats F.N.B. on 10 of the 17 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.

About F.N.B.

F.N.B. Corporation, a bank and financial holding company, provides a range of financial products and services primarily to consumers, corporations, governments, and small- to medium-sized businesses in the United States. The company operates through three segments: Community Banking, Wealth Management, and Insurance. The Community Banking segment offers commercial and consumer banking services, including corporate and small business banking, investment real estate financing, business credit, capital market, and lease financing services. It also provides consumer banking products and services, such as deposit products, mortgage and consumer lending services, and mobile and online banking services. The Wealth Management segment provides personal and corporate fiduciary services comprising administration of decedent and trust estates; and securities brokerage and investment advisory services, mutual funds, and annuities. The Insurance segment comprises commercial and personal insurance, and reinsurance products, as well as mezzanine financing options for small- to medium-sized businesses. The company operates community banking branches in Pennsylvania, Ohio, Maryland, West Virginia, North Carolina, South Carolina, Washington, D.C., and Virginia. F.N.B. Corporation was founded in 1864 and is headquartered in Pittsburgh, Pennsylvania.