BB&T (BBT) versus Valley National Bancorp (VLY) Critical Analysis

BB&T (NYSE: BBT) and Valley National Bancorp (NYSE:VLY) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Risk and Volatility

BB&T has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Valley National Bancorp has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Profitability

This table compares BB&T and Valley National Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BB&T 21.63% 10.38% 1.26%
Valley National Bancorp 15.41% 8.20% 0.81%

Insider and Institutional Ownership

63.2% of BB&T shares are owned by institutional investors. Comparatively, 54.7% of Valley National Bancorp shares are owned by institutional investors. 0.5% of BB&T shares are owned by insiders. Comparatively, 3.5% of Valley National Bancorp shares are owned by 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.

Valuation & Earnings

This table compares BB&T and Valley National Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BB&T $12.16 billion 3.29 $2.39 billion $3.14 16.33
Valley National Bancorp $945.86 million 4.41 $161.90 million $0.69 18.23

BB&T has higher revenue and earnings than Valley National Bancorp. BB&T is trading at a lower price-to-earnings ratio than Valley National Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

BB&T pays an annual dividend of $1.50 per share and has a dividend yield of 2.9%. Valley National Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 3.5%. BB&T pays out 47.8% of its earnings in the form of a dividend. Valley National Bancorp pays out 63.8% 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. BB&T has increased its dividend for 6 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for BB&T and Valley National Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BB&T 0 10 14 0 2.58
Valley National Bancorp 0 3 5 0 2.63

BB&T currently has a consensus target price of $54.10, indicating a potential upside of 5.64%. Valley National Bancorp has a consensus target price of $13.86, indicating a potential upside of 10.59%. Given Valley National Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Valley National Bancorp is more favorable than BB&T.

Summary

BB&T beats Valley National Bancorp on 11 of the 17 factors compared between the two stocks.

BB&T Company Profile

BB&T Corporation operates as a financial holding company that provides various banking and trust services for small and mid-size businesses, public agencies, local governments, and individuals. The company operates through four segments: CB-Retail, CB-Commercial, IH&PF, and FS&CF. Its deposit products include noninterest-bearing checking, interest-bearing checking, savings, and money market deposit accounts, as well as certificates of deposit and individual retirement accounts. The company also provides various funding services; and asset management, automobile lending; bankcard lending; consumer finance; home equity and mortgage lending; insurance, such as property and casualty, life, health, employee benefits, commercial general liability, surety, title and other insurance products; investment brokerage; mobile/online banking; and payment, lease financing, small business lending, and wealth management/private banking services. In addition, it offers association, capital markets, institutional trust, insurance premium and commercial finance, international banking, leasing, merchant, commercial deposit and treasury, commercial middle market lending, floor plan lending, commercial mortgage lending, mortgage warehouse lending, private equity investments, real estate lending, and supply chain management services. Further, the company provides retail brokerage, equity and debt underwriting, investment advice, corporate finance, and equity research services, as well as facilitates the origination, trading, and distribution of fixed-income securities and equity products. Additionally, BB&T Corporation offers non-deposit investment products, including discount brokerage services, equities, fixed-rate, variable-rate and index annuities, mutual funds, government and municipal bonds, and money market funds. As of December 31, 2017, it operated 2,049 offices. The company was founded in 1872 and is headquartered in Winston-Salem, North Carolina.

Valley National Bancorp Company Profile

Valley National Bancorp operates as the holding company for the Valley National Bank that provides commercial, retail, trust, and investment services. The company operates through Commercial Lending, Consumer Lending, and Investment Management segments. Its deposit products include non-interest bearing, savings, NOW, and money market deposits, as well as certificates of deposit. The company's loan products comprise construction, residential mortgage, home equity, automobile, and floating rate and adjustable rate commercial and industrial loans, as well as fixed rate owner occupied and commercial real estate loans, credit card loans, personal lines of credit, personal loans, and loans secured by cash surrender value of life insurance. It also invests in securities and interest-bearing deposits with banks, such as fixed rate securities and federal funds; and offers international banking services, such as standby letters of credit, documentary letters of credit and related products, and other ancillary services. In addition, the company provides asset management advisory, trust, and asset-based lending support services; property and casualty, life, health, and title insurance products; and health care equipment lending and other commercial equipment leases, as well as real estate related investments. Further, it offers other banking services comprising automated teller machine, telephone and Internet banking, remote deposit capturing, overdraft, drive-in and night deposit, and safe deposit services. As of December 31, 2017, the company operated 237 branches in northern and central New Jersey; the New York City boroughs of Manhattan, Brooklyn, Queens, and Long Island; and southeast and central Florida. Valley National Bancorp was founded in 1927 and is headquartered in Wayne, New Jersey.

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