Analyzing First Defiance Financial (FDEF) & Wintrust Financial (WTFC)

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

Earnings & Valuation

This table compares First Defiance Financial and Wintrust Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Defiance Financial $121.41 million 4.53 $28.84 million $3.09 17.51
Wintrust Financial $1.14 billion 4.11 $206.87 million $4.17 20.04

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

Dividends

First Defiance Financial pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Wintrust Financial pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. First Defiance Financial pays out 32.4% of its earnings in the form of a dividend. Wintrust Financial pays out 13.4% 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.

Profitability

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

Net Margins Return on Equity Return on Assets
First Defiance Financial 21.47% 9.51% 1.17%
Wintrust Financial 19.74% 9.32% 0.92%

Volatility & Risk

First Defiance Financial has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for First Defiance Financial and Wintrust Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Defiance Financial 0 1 1 0 2.50
Wintrust Financial 0 5 3 0 2.38

First Defiance Financial presently has a consensus target price of $56.00, suggesting a potential upside of 3.49%. Wintrust Financial has a consensus target price of $82.43, suggesting a potential downside of 1.37%. Given First Defiance Financial’s stronger consensus rating and higher probable upside, equities research analysts clearly believe First Defiance Financial is more favorable than Wintrust Financial.

Insider & Institutional Ownership

64.4% of First Defiance Financial shares are held by institutional investors. Comparatively, 91.7% of Wintrust Financial shares are held by institutional investors. 3.4% of First Defiance Financial shares are held by insiders. Comparatively, 2.0% of Wintrust Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

First Defiance Financial beats Wintrust Financial on 9 of the 16 factors compared between the two stocks.

About First Defiance Financial

First Defiance Financial Corp. is a unitary thrift holding company that focuses on traditional banking and property and casualty, life and group health insurance products. The Company operates through its subsidiaries, First Federal Bank of the Midwest (First Federal or the Bank), First Insurance Group of the Midwest, Inc. (First Insurance) and First Defiance Risk Management Inc. (First Defiance Risk Management). First Federal is a federally chartered stock savings bank. First Federal’s banking activities include originating and servicing residential, commercial, and consumer loans, and providing a range of depository, trust and wealth management services. First Insurance offers property and casualty, and group health and life insurance products. First Defiance Risk Management is an insurance company subsidiary of the Company to insure the Company and its subsidiaries against certain risks to the operations of the Company.

About Wintrust Financial

Wintrust Financial Corporation is a financial holding company. The Company conducts its businesses through three segments: community banking, specialty finance and wealth management. The Company offers community banking services to individuals, small to mid-sized businesses, local governmental units and institutional clients. Through specialty finance segment, the Company offers financing of insurance premiums for businesses and individuals; accounts receivable financing, value-added, out-sourced administrative services, and other specialty finance businesses. The Company offers a range of wealth management services through its subsidiaries, including trust and investment services, asset management and securities brokerage services. The Company offers MaxSafe deposit accounts, which provide customers with expanded Federal Deposit Insurance Corporation (FDIC) insurance coverage by spreading a customer’s deposit across its banks.

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