Reviewing First Interstate BancSystem (NASDAQ:FIBK) & Wintrust Financial (NASDAQ:WTFC)

Wintrust Financial (NASDAQ:WTFC) and First Interstate BancSystem (NASDAQ:FIBK) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Wintrust Financial and First Interstate BancSystem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wintrust Financial	20.11%	13.15%	1.25%
First Interstate BancSystem	22.64%	9.13%	1.16%

Insider and Institutional Ownership

93.5% of Wintrust Financial shares are owned by institutional investors. Comparatively, 88.7% of First Interstate BancSystem shares are owned by institutional investors. 1.2% of Wintrust Financial shares are owned by company insiders. Comparatively, 8.0% of First Interstate BancSystem shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Wintrust Financial pays an annual dividend of $2.20 per share and has a dividend yield of 1.4%. First Interstate BancSystem pays an annual dividend of $1.88 per share and has a dividend yield of 5.2%. Wintrust Financial pays out 18.4% of its earnings in the form of a dividend. First Interstate BancSystem pays out 61.2% 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. Wintrust Financial has increased its dividend for 12 consecutive years.

Earnings and Valuation

This table compares Wintrust Financial and First Interstate BancSystem”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wintrust Financial	$4.23 billion	2.46	$823.84 million	$11.93	12.92
First Interstate BancSystem	$1.41 billion	2.51	$302.10 million	$3.07	11.87

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

Risk and Volatility

Wintrust Financial has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, First Interstate BancSystem has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Wintrust Financial and First Interstate BancSystem, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wintrust Financial	0	2	10	1	2.92
First Interstate BancSystem	2	4	2	0	2.00

Wintrust Financial currently has a consensus price target of $168.92, suggesting a potential upside of 9.61%. First Interstate BancSystem has a consensus price target of $37.00, suggesting a potential upside of 1.56%. Given Wintrust Financial’s stronger consensus rating and higher probable upside, research analysts clearly believe Wintrust Financial is more favorable than First Interstate BancSystem.

Summary

Wintrust Financial beats First Interstate BancSystem on 14 of the 18 factors compared between the two stocks.

About Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance, and Wealth Management. The Community Banking segment offers non-interest bearing deposits, non-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.

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. It offers various traditional depository products, including checking, savings, and time deposits; and repurchase agreements primarily for commercial and municipal depositors. The company also offers real estate loans comprising commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans comprising direct personal loans, credit card loans and lines of credit, and indirect loans; variable and fixed rate commercial loans for small and medium-sized manufacturing, wholesale, retail, and service businesses for working capital needs and business expansions; and agricultural loans. In addition, it provides a range of trust, employee benefit, investment management, insurance, agency, and custodial services to individuals, businesses, and nonprofit organizations. Further, the company offers marketing, credit review, loan servicing, credit cards issuance and servicing, mortgage loan sales and servicing, indirect consumer loan purchasing and processing, loan collection services, other operational, and specialized staff support services, as well as online and mobile banking services. The company serves individuals, businesses, municipalities, and other entities in various industries, including agriculture, construction, education, governmental services, healthcare, hospitality, housing, professional services, real estate development, retail, technology, tourism, and wholesale trade. First Interstate BancSystem, Inc. was incorporated in 1971 and is headquartered in Billings, Montana.