Contrasting Northern Trust (NASDAQ:NTRS) and KeyCorp (NYSE:KEY)

KeyCorp (NYSE:KEY) and Northern Trust (NASDAQ:NTRS) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings for KeyCorp and Northern Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KeyCorp	0	11	10	0	2.48
Northern Trust	3	8	2	0	1.92

KeyCorp currently has a consensus price target of $19.3947, suggesting a potential upside of 8.96%. Northern Trust has a consensus price target of $116.5833, suggesting a potential downside of 7.41%. Given KeyCorp’s stronger consensus rating and higher probable upside, equities analysts plainly believe KeyCorp is more favorable than Northern Trust.

Valuation & Earnings

This table compares KeyCorp and Northern Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KeyCorp	$9.24 billion	2.11	-$161.00 million	($0.07)	-254.29
Northern Trust	$16.06 billion	1.50	$2.03 billion	$8.51	14.80

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

Insider and Institutional Ownership

79.7% of KeyCorp shares are owned by institutional investors. Comparatively, 83.2% of Northern Trust shares are owned by institutional investors. 0.5% of KeyCorp shares are owned by insiders. Comparatively, 0.8% of Northern Trust shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

KeyCorp pays an annual dividend of $0.82 per share and has a dividend yield of 4.6%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 2.4%. KeyCorp pays out -1,171.4% of its earnings in the form of a dividend. Northern Trust pays out 35.3% 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. KeyCorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares KeyCorp and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KeyCorp	1.49%	9.65%	0.82%
Northern Trust	11.75%	14.06%	1.04%

Volatility and Risk

KeyCorp has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.

Summary

Northern Trust beats KeyCorp on 10 of the 16 factors compared between the two stocks.

About KeyCorp

KeyCorp operates as the holding company for KeyBank National Association that provides various retail and commercial banking products and services in the United States. It operates in two segments, Consumer Bank and Commercial Bank. The company offers various deposits, investment products and services; commercial leasing, investment management, consumer finance; and personal finance and financial wellness, student loan refinancing, mortgage and home equity, lending, credit card, treasury, business advisory, wealth management, asset management, cash management, portfolio management, and trust and related services to individuals and small and medium-sized businesses. It also provides a suite of banking and capital market products, such as syndicated finance, debt and equity capital market products, commercial payments, equipment finance, commercial mortgage banking, derivatives, foreign exchange, financial advisory, and public finance, as well as commercial mortgage loans to consumer, energy, healthcare, industrial, public sector, real estate, and technology sectors for middle market clients. In addition, the company offers community development financing, securities underwriting, brokerage, and investment banking services. The company was founded in 1849 and is headquartered in Cleveland, Ohio.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.