Comparing Truist Financial (NYSE:TFC) & Financial Institutions (NASDAQ:FISI)

Financial Institutions (NASDAQ:FISI) and Truist Financial (NYSE:TFC) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Volatility and Risk

Financial Institutions has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Truist Financial has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Institutional and Insider Ownership

60.5% of Financial Institutions shares are held by institutional investors. Comparatively, 71.3% of Truist Financial shares are held by institutional investors. 2.7% of Financial Institutions shares are held by company insiders. Comparatively, 0.2% of Truist Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for Financial Institutions and Truist Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Financial Institutions	0	3	0	0	2.00
Truist Financial	0	7	10	0	2.59

Financial Institutions currently has a consensus target price of $20.67, suggesting a potential upside of 18.71%. Truist Financial has a consensus target price of $43.17, suggesting a potential upside of 17.35%. Given Financial Institutions’ higher possible upside, equities analysts clearly believe Financial Institutions is more favorable than Truist Financial.

Profitability

This table compares Financial Institutions and Truist Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Financial Institutions	11.53%	9.66%	0.65%
Truist Financial	-4.28%	9.15%	0.92%

Earnings & Valuation

This table compares Financial Institutions and Truist Financial’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Financial Institutions	$334.38 million	0.80	$50.26 million	$2.51	6.94
Truist Financial	$33.25 billion	1.48	-$1.09 billion	($1.32)	-27.87

Financial Institutions has higher earnings, but lower revenue than Truist Financial. Truist Financial is trading at a lower price-to-earnings ratio than Financial Institutions, indicating that it is currently the more affordable of the two stocks.

Dividends

Financial Institutions pays an annual dividend of $1.20 per share and has a dividend yield of 6.9%. Truist Financial pays an annual dividend of $2.08 per share and has a dividend yield of 5.7%. Financial Institutions pays out 47.8% of its earnings in the form of a dividend. Truist Financial pays out -157.6% 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. Financial Institutions has raised its dividend for 13 consecutive years and Truist Financial has raised its dividend for 13 consecutive years.

About Financial Institutions

Financial Institutions, Inc. operates as a holding company for the Five Star Bank, a chartered bank that provides banking and financial services to individuals, municipalities, and businesses in New York. The company provides checking and savings account programs, including money market accounts, certificates of deposit, sweep investments, and individual retirement and other qualified plan accounts, as well as NOW accounts. Its loan products include term loans and lines of credit; short and medium-term commercial loans for working capital, business expansion, and purchase of equipment; commercial business loans to the agricultural industry; commercial mortgage loans; one-to-four family residential mortgage loans, home improvement loans, closed-end home equity loans, and home equity lines of credit; and consumer loans, such as automobile, secured installment, and personal loans. The company offers personal insurance products, including automobile, homeowners, boat, recreational vehicle, landlord, and umbrella coverage; commercial insurance comprising property, liability, automobile, inland marine, workers compensation, bonds, crop, and umbrella insurance products; and financial services, such as life and disability insurance, medicare supplements, long-term care, annuities, mutual funds, and retirement programs. In addition, it offers customized investment advisory, wealth management, investment consulting, and retirement plan services, as well as operates a real estate investment trust that holds residential mortgages and commercial real estate loans. Financial Institutions, Inc. was founded in 1817 and is headquartered in Warsaw, New York.

About Truist Financial

Truist Financial Corporation, a financial services company, provides banking and trust services in the Southeastern and Mid-Atlantic United States. The company operates through three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings.Its deposit products include noninterest-bearing checking, interest-bearing checking, savings, and money market deposit accounts, as well as certificates of deposit and individual retirement accounts. The company also provides funding; asset management; automobile lending; credit card lending; consumer finance; home equity and mortgage lending; other direct retail lending; insurance; investment brokerage; mobile/online banking; payment solutions; point-of-sale lending; retail and small business deposit products; small business lending; and wealth management/private banking services. In addition, it offers asset based lending, investment banking and capital market, institutional trust, insurance premium finance, derivatives, commercial lending, international banking, leasing, merchant, commercial deposit and treasury, floor plan, mortgage warehouse lending, real estate lending, and supply chain financing services. Further, the company provides insurance brokerage, retail and wholesale brokerage, securities underwriting and market making, loan syndication, and investment management and advisory services. The company was formerly known as BB&T Corporation and changed its name to Truist Financial Corporation in December 2019. Truist Financial Corporation was founded in 1872 and is headquartered in Charlotte, North Carolina.