Financial Comparison: First Commonwealth Financial (NYSE:FCF) versus Community Bank System (NYSE:CBU)

First Commonwealth Financial (NYSE:FCF) and Community Bank System (NYSE:CBU) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, risk, profitability and valuation.

Earnings and Valuation

This table compares First Commonwealth Financial and Community Bank System’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Commonwealth Financial $380.89 million 3.75 $107.50 million $1.10 13.19
Community Bank System $586.79 million 6.07 $168.64 million $3.37 20.48

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

Profitability

This table compares First Commonwealth Financial and Community Bank System’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Commonwealth Financial 26.01% 10.76% 1.36%
Community Bank System 27.57% 9.86% 1.60%

Risk and Volatility

First Commonwealth Financial has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500. Comparatively, Community Bank System has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.

Dividends

First Commonwealth Financial pays an annual dividend of $0.40 per share and has a dividend yield of 2.8%. Community Bank System pays an annual dividend of $1.64 per share and has a dividend yield of 2.4%. First Commonwealth Financial pays out 36.4% of its earnings in the form of a dividend. Community Bank System pays out 48.7% 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. First Commonwealth Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and target prices for First Commonwealth Financial and Community Bank System, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Commonwealth Financial 0 2 2 0 2.50
Community Bank System 0 2 0 0 2.00

First Commonwealth Financial presently has a consensus price target of $16.00, suggesting a potential upside of 10.27%. Community Bank System has a consensus price target of $63.00, suggesting a potential downside of 8.71%. Given First Commonwealth Financial’s stronger consensus rating and higher possible upside, equities research analysts clearly believe First Commonwealth Financial is more favorable than Community Bank System.

Institutional & Insider Ownership

67.4% of First Commonwealth Financial shares are owned by institutional investors. Comparatively, 71.0% of Community Bank System shares are owned by institutional investors. 1.5% of First Commonwealth Financial shares are owned by insiders. Comparatively, 2.2% of Community Bank System 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.

Summary

Community Bank System beats First Commonwealth Financial on 9 of the 16 factors compared between the two stocks.

About First Commonwealth Financial

First Commonwealth Financial Corporation, through its subsidiaries, provides consumer and commercial banking services to individuals, and small and mid-sized businesses in the United States. Its consumer services include personal checking accounts, interest-earning checking accounts, savings accounts, insured money market accounts, debit cards, investment certificates, fixed and variable rate certificates of deposit, mortgage loans, secured and unsecured installment loans, construction and real estate loans, safe deposit facilities, credit cards, credit lines with overdraft checking protection, IRA accounts, and automated teller machine (ATM) services, as well as Internet, mobile, and telephone banking services. The company's commercial banking services comprise commercial lending, business checking accounts, online account management services, payroll direct deposits, commercial cash management services, and repurchase agreements, as well as ACH origination services. It also offers various trust and asset management services; auto, home, and business insurance, as well as term life insurance; and annuities, mutual funds, and stock and bond brokerage services through a broker-dealer and insurance brokers. As of March 4, 2019, the company operated 137 community banking offices in western and central Pennsylvania, as well as northeastern, central, and southwestern Ohio. It also leases 3 mortgage loan production offices and 3 corporate loan production offices, as well as operates a network of 150 automated teller machines. First Commonwealth Financial Corporation was founded in 1934 and is headquartered in Indiana, Pennsylvania.

About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and other financial services to retail, commercial, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as checking, savings, and money market accounts, as well as time deposits. It also provides loans comprising consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory services; and asset management services to individuals, corporations, corporate pension and profit sharing plans, and foundations, as well as operates as a full-service insurance agency that offers personal and commercial property insurance, and other risk management products and services. Further, it offers contribution plan administration services, actuarial and benefits consulting services, and collective investment fund administration and institutional trust services, as well as employee benefit trust, retirement plan administration, VEBA/HRA, and health and welfare consulting services. Additionally, the company provides wealth management, higher educational planning, fiduciary, risk management, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and advisory products, as well as transfer agency and master recordkeeping services. As of December 31, 2018, it had 224 branches in Upstate New York, as well as Northeastern Pennsylvania, Vermont, and Western Massachusetts. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.

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