Head to Head Comparison: Chemical Financial Corporation (CHFC) and Prosperity Bancshares (PB)

Chemical Financial Corporation (NASDAQ: CHFC) and Prosperity Bancshares (NYSE:PB) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, profitability and dividends.

Insider & Institutional Ownership

78.5% of Chemical Financial Corporation shares are owned by institutional investors. Comparatively, 72.4% of Prosperity Bancshares shares are owned by institutional investors. 2.2% of Chemical Financial Corporation shares are owned by insiders. Comparatively, 4.9% of Prosperity Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Chemical Financial Corporation has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Valuation and Earnings

This table compares Chemical Financial Corporation and Prosperity Bancshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Chemical Financial Corporation $532.73 million 6.99 $108.03 million $2.62 19.97
Prosperity Bancshares $794.20 million 5.64 $274.46 million $3.95 16.32

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

Profitability

This table compares Chemical Financial Corporation and Prosperity Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chemical Financial Corporation 24.23% 8.05% 1.16%
Prosperity Bancshares 34.79% 7.38% 1.23%

Analyst Ratings

This is a summary of recent recommendations and price targets for Chemical Financial Corporation and Prosperity Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chemical Financial Corporation 1 1 4 0 2.50
Prosperity Bancshares 1 7 2 0 2.10

Chemical Financial Corporation presently has a consensus target price of $53.25, indicating a potential upside of 1.80%. Prosperity Bancshares has a consensus target price of $71.05, indicating a potential upside of 10.22%. Given Prosperity Bancshares’ higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than Chemical Financial Corporation.

Dividends

Chemical Financial Corporation pays an annual dividend of $1.12 per share and has a dividend yield of 2.1%. Prosperity Bancshares pays an annual dividend of $1.36 per share and has a dividend yield of 2.1%. Chemical Financial Corporation pays out 42.7% of its earnings in the form of a dividend. Prosperity Bancshares pays out 34.4% 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. Prosperity Bancshares has raised its dividend for 13 consecutive years.

Summary

Prosperity Bancshares beats Chemical Financial Corporation on 10 of the 17 factors compared between the two stocks.

Chemical Financial Corporation Company Profile

Chemical Financial Corporation is a financial holding company. The Company operates in the commercial banking segment. The Company, through its subsidiary bank, Chemical Bank, offers banking and fiduciary products and services. These products and services include business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, access to insurance and investment products, corporate and personal wealth management services, and other banking services. As of December 31, 2016, the Corporation and Chemical Bank served these markets through 249 banking offices. In addition to the banking offices, Chemical Bank operated eight loan production offices and over 272 automated teller machines, both on- and off-bank premises, as of December 31, 2016. Its loan portfolio includes commercial and real estate construction.

Prosperity Bancshares Company Profile

Prosperity Bancshares, Inc. is a financial holding company, which operates through its bank subsidiary, Prosperity Bank (the Bank). The Bank provides a range of financial products and services to small and medium-sized businesses and consumers. The Company, through the Bank, offers a range of loan and deposit products to its customers. At December 31, 2016, the Bank maintained approximately 598,400 separate deposit accounts including certificates of deposit and 53,600 separate loan accounts. It offered commercial real estate (including multifamily residential) and one- to four-family residential loans, as of December 31, 2016. As of December 31, 2016, the Bank operated 245 full service banking locations; 65 in the Houston area; 29 in the South Texas area; 36 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area; 34 in the West Texas area; 16 in the Bryan/College Station area, six in the Central Oklahoma area and eight in the Tulsa, Oklahoma area.

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