Wells Fargo & Company (NYSE:WFC – Get Free Report) and Cullen/Frost Bankers (NYSE:CFR – Get Free Report) are both financial services companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.
Analyst Ratings
This is a summary of current ratings and price targets for Wells Fargo & Company and Cullen/Frost Bankers, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Wells Fargo & Company | 0 | 7 | 7 | 1 | 2.60 |
| Cullen/Frost Bankers | 1 | 7 | 4 | 0 | 2.25 |
Wells Fargo & Company presently has a consensus target price of $48.13, suggesting a potential upside of 2.11%. Cullen/Frost Bankers has a consensus target price of $135.91, suggesting a potential upside of 17.94%. Given Cullen/Frost Bankers’ higher possible upside, analysts plainly believe Cullen/Frost Bankers is more favorable than Wells Fargo & Company.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Wells Fargo & Company | $82.86 billion | 2.13 | $13.18 billion | $4.00 | 11.78 |
| Cullen/Frost Bankers | $1.88 billion | 3.95 | $579.15 million | $10.01 | 11.51 |
Wells Fargo & Company has higher revenue and earnings than Cullen/Frost Bankers. Cullen/Frost Bankers is trading at a lower price-to-earnings ratio than Wells Fargo & Company, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Wells Fargo & Company and Cullen/Frost Bankers’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Wells Fargo & Company | 16.18% | 11.15% | 0.96% |
| Cullen/Frost Bankers | 30.40% | 21.59% | 1.26% |
Volatility and Risk
Wells Fargo & Company has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, Cullen/Frost Bankers has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.
Insider and Institutional Ownership
72.1% of Wells Fargo & Company shares are owned by institutional investors. Comparatively, 80.5% of Cullen/Frost Bankers shares are owned by institutional investors. 0.1% of Wells Fargo & Company shares are owned by insiders. Comparatively, 2.9% of Cullen/Frost Bankers 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.
Dividends
Wells Fargo & Company pays an annual dividend of $1.20 per share and has a dividend yield of 2.5%. Cullen/Frost Bankers pays an annual dividend of $3.48 per share and has a dividend yield of 3.0%. Wells Fargo & Company pays out 30.0% of its earnings in the form of a dividend. Cullen/Frost Bankers pays out 34.8% 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. Wells Fargo & Company has increased its dividend for 2 consecutive years and Cullen/Frost Bankers has increased its dividend for 29 consecutive years. Cullen/Frost Bankers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Cullen/Frost Bankers beats Wells Fargo & Company on 10 of the 18 factors compared between the two stocks.
About Wells Fargo & Company
Wells Fargo & Company, a diversified financial services company, provides banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally. It operates through four segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. The Consumer Banking and Lending segment offers diversified financial products and services for consumers and small businesses. Its financial products and services include checking and savings accounts, and credit and debit cards, as well as home, auto, personal, and small business lending services. The Commercial Banking segment provides financial solutions to private, family owned, and certain public companies. Its products and services include banking and credit products across various industry sectors and municipalities, secured lending and lease products, and treasury management services. The Corporate and Investment Banking segment offers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government, and institutional clients. Its products and services comprise corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity, and fixed income solutions, as well as sales, trading, and research capabilities services. The Wealth and Investment Management segment provides personalized wealth management, brokerage, financial planning, lending, private banking, and trust and fiduciary products and services to affluent, high-net worth, and ultra-high-net worth clients. It also operates through financial advisors. Its serves to independent offices and consumer banks. The company was founded in 1852 and is headquartered in San Francisco, California.
About Cullen/Frost Bankers
Cullen/Frost Bankers, Inc. operates as the bank holding company for Frost Bank that provides commercial and consumer banking services in Texas. It operates in two segments, Banking and Frost Wealth Advisors. The company offers commercial banking services to corporations and other business clients, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; and treasury management services, as well as originates commercial leasing services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, first mortgage loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds transmitting, and foreign exchange services. Further, it offers trust, investment, agency, and custodial services for individual and corporate clients; provides capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and supports international business activities. Additionally, the company offers insurance and securities brokerage services; and holds securities for investment purposes, as well as investment management services to Frost-managed mutual funds, institutions, and individuals. The company serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. Cullen/Frost Bankers, Inc. was founded in 1868 and is headquartered in San Antonio, Texas.
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