Analyzing Northwest Bancshares (NASDAQ:NWBI) and UMB Financial (NASDAQ:UMBF)

UMB Financial (NASDAQ:UMBF) and Northwest Bancshares (NASDAQ:NWBI) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Profitability

This table compares UMB Financial and Northwest Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UMB Financial	14.55%	14.23%	1.00%
Northwest Bancshares	14.28%	8.72%	0.93%

Insider & Institutional Ownership

87.8% of UMB Financial shares are held by institutional investors. Comparatively, 66.3% of Northwest Bancshares shares are held by institutional investors. 8.9% of UMB Financial shares are held by insiders. Comparatively, 1.1% of Northwest Bancshares shares are held 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.

Valuation & Earnings

This table compares UMB Financial and Northwest Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UMB Financial	$2.38 billion	2.12	$350.02 million	$7.53	13.77
Northwest Bancshares	$502.30 million	3.29	$134.96 million	$1.03	12.61

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

Risk and Volatility

UMB Financial has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Northwest Bancshares has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Dividends

UMB Financial pays an annual dividend of $1.56 per share and has a dividend yield of 1.5%. Northwest Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 6.2%. UMB Financial pays out 20.7% of its earnings in the form of a dividend. Northwest Bancshares pays out 77.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UMB Financial has raised its dividend for 31 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for UMB Financial and Northwest Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UMB Financial	0	1	4	1	3.00
Northwest Bancshares	1	1	0	0	1.50

UMB Financial presently has a consensus target price of $102.33, indicating a potential downside of 1.30%. Northwest Bancshares has a consensus target price of $11.00, indicating a potential downside of 15.32%. Given UMB Financial’s stronger consensus rating and higher possible upside, equities analysts clearly believe UMB Financial is more favorable than Northwest Bancshares.

Summary

UMB Financial beats Northwest Bancshares on 16 of the 18 factors compared between the two stocks.

About UMB Financial

UMB Financial Corporation operates as the bank holding company that provides banking services and asset servicing in the United States and internationally. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers fund, asset management, and healthcare service to institutional clients; and fund administration and accounting, investor service and transfer agency, mutual fund service, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, as well as internet banking, ATM network, private banking, brokerage and insurance service, and investment advisory, custody, and trust services. It operates through a network of branches and offices. The company was founded in 1913 and is headquartered in Kansas City, Missouri.

About Northwest Bancshares

Northwest Bancshares, Inc. operates as the bank holding company for Northwest Bank, a state-chartered savings bank that provides personal and business banking solutions. The company accepts various deposits, including checking, savings, money market deposit, term certificate, and individual retirement accounts. It also offers loan products comprising one-to-four-family residential real estate loans, shorter term consumer loans, and loans collateralized by multi-family residential and commercial real estate; home equity loans and lines of credit; commercial business and real estate loans; commercial loans; and consumer loans, including automobile loans, sales finance loans, unsecured personal loans, credit card loans, and loans secured by investment accounts, as well as investment management and trust services. The company operates community banking locations in Pennsylvania, Western New York, Eastern Ohio, and Indiana. Northwest Bancshares, Inc. was founded in 1896 and is headquartered in Columbus, Ohio.