Head-To-Head Analysis: Prosperity Bancshares (NYSE:PB) & International Bancshares (NASDAQ:IBOC)

Prosperity Bancshares (NYSE:PB) and International Bancshares (NASDAQ:IBOC) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, institutional ownership, valuation, profitability, analyst recommendations, earnings and dividends.

Profitability

This table compares Prosperity Bancshares and International Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prosperity Bancshares	26.79%	6.64%	1.22%
International Bancshares	38.65%	15.62%	2.59%

Dividends

Prosperity Bancshares pays an annual dividend of $2.32 per share and has a dividend yield of 3.5%. International Bancshares pays an annual dividend of $1.40 per share and has a dividend yield of 2.4%. Prosperity Bancshares pays out 45.8% of its earnings in the form of a dividend. International Bancshares pays out 21.3% 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. Prosperity Bancshares has raised its dividend for 27 consecutive years and International Bancshares has raised its dividend for 16 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

80.7% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 65.9% of International Bancshares shares are held by institutional investors. 4.2% of Prosperity Bancshares shares are held by insiders. Comparatively, 13.9% of International Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Prosperity Bancshares and International Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prosperity Bancshares	0	6	8	0	2.57
International Bancshares	0	0	0	0	0.00

Prosperity Bancshares currently has a consensus target price of $83.35, indicating a potential upside of 26.78%. Given Prosperity Bancshares’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Prosperity Bancshares is more favorable than International Bancshares.

Volatility & Risk

Prosperity Bancshares has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, International Bancshares has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.

Earnings and Valuation

This table compares Prosperity Bancshares and International Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prosperity Bancshares	$1.15 billion	5.47	$479.39 million	$5.06	12.99
International Bancshares	$833.64 million	4.41	$411.77 million	$6.57	8.99

Prosperity Bancshares has higher revenue and earnings than International Bancshares. International Bancshares is trading at a lower price-to-earnings ratio than Prosperity Bancshares, indicating that it is currently the more affordable of the two stocks.

Summary

Prosperity Bancshares beats International Bancshares on 11 of the 17 factors compared between the two stocks.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.

About International Bancshares

International Bancshares Corporation, a financial holding company, provides commercial and retail banking services in Texas and the State of Oklahoma. It accepts checking and saving deposits; and offers commercial, real estate, personal, home improvement, automobile, and other installment and term loans. The company also provides international banking services, including letters of credit, commercial and industrial loans, and foreign exchange services. In addition, it offers other banking related services, such as credit cards, safety deposit boxes, collection, notary public, escrow, drive up and walk up facilities, and other customary banking services; and Internet banking services, as well as securities products through third party providers. The company was founded in 1966 and is headquartered in Laredo, Texas.