Pinnacle Financial Partners (PNFP) versus S & T Bancorp (STBA) Critical Survey

Pinnacle Financial Partners (NASDAQ: PNFP) and S & T Bancorp (NASDAQ:STBA) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.

Profitability

This table compares Pinnacle Financial Partners and S & T Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle Financial Partners 27.41% 7.36% 1.18%
S & T Bancorp 26.44% 9.41% 1.15%

Dividends

Pinnacle Financial Partners pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. S & T Bancorp pays an annual dividend of $0.88 per share and has a dividend yield of 2.2%. Pinnacle Financial Partners pays out 17.3% of its earnings in the form of a dividend. S & T Bancorp pays out 37.8% 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.

Earnings & Valuation

This table compares Pinnacle Financial Partners and S & T Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pinnacle Financial Partners $484.61 million 10.95 $127.22 million $3.23 21.15
S & T Bancorp $282.41 million 5.06 $71.39 million $2.33 17.52

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

Volatility & Risk

Pinnacle Financial Partners has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, S & T Bancorp has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Insider & Institutional Ownership

71.8% of Pinnacle Financial Partners shares are held by institutional investors. Comparatively, 55.2% of S & T Bancorp shares are held by institutional investors. 5.4% of Pinnacle Financial Partners shares are held by company insiders. Comparatively, 2.7% of S & T Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Pinnacle Financial Partners and S & T Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle Financial Partners 0 1 5 0 2.83
S & T Bancorp 0 3 0 0 2.00

Pinnacle Financial Partners presently has a consensus price target of $75.00, suggesting a potential upside of 9.81%. S & T Bancorp has a consensus price target of $39.00, suggesting a potential downside of 4.46%. Given Pinnacle Financial Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Pinnacle Financial Partners is more favorable than S & T Bancorp.

Summary

Pinnacle Financial Partners beats S & T Bancorp on 14 of the 16 factors compared between the two stocks.

About Pinnacle Financial Partners

Pinnacle Financial Partners, Inc. is a bank holding company. The Company operates through its subsidiary, Pinnacle Bank. The Company operates as a community bank primarily in the urban markets of Nashville, Knoxville, Memphis and Chattanooga, Tennessee and other counties. It provides the personalized service associated with small community banks, while seeking to offer the products and services, such as investments and treasury management. Pinnacle Bank offers an array of convenience-centered products and services, including round the clock telephone and Internet banking, mobile banking, debit and credit cards, direct deposit, remote deposit and cash management services for small- to medium-sized businesses. In addition, Pinnacle Bank is associated with a network of automated teller machines of other financial institutions that its clients are able to use throughout Tennessee and other regions.

About S & T Bancorp

S&T Bancorp, Inc. (S&T) is a bank holding company. The Company operates through three segments: Community Banking, Wealth Management and Insurance. The Community Banking segment offers services, which include accepting time and demand deposits, and originating commercial and consumer loans. The Wealth Management segment offers brokerage services, serves as executor and trustee under wills and deeds and as guardian and custodian of employee benefits and provides other trust services. In addition, it is a registered investment advisor that manages private investment accounts for individuals and institutions. The insurance segment includes an insurance agency offering commercial property and casualty insurance, group life and health coverage, employee benefit solutions and personal insurance lines. The Company’s subsidiaries include S&T Bank, 9th Street Holdings, Inc. and STBA Capital Trust I.

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