Financial Institutions (NASDAQ:FISI) and Flagstar Financial (NYSE:FLG) Financial Analysis

Financial Institutions (NASDAQ:FISI) and Flagstar Financial (NYSE:FLG) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Financial Institutions	-4.96%	10.44%	0.92%
Flagstar Financial	-10.83%	-6.60%	-0.51%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Financial Institutions and Flagstar Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Financial Institutions	1	1	2	0	2.25
Flagstar Financial	2	6	5	0	2.23

Financial Institutions presently has a consensus target price of $33.00, suggesting a potential upside of 21.82%. Flagstar Financial has a consensus target price of $13.71, suggesting a potential upside of 14.09%. Given Financial Institutions’ stronger consensus rating and higher probable upside, research analysts clearly believe Financial Institutions is more favorable than Flagstar Financial.

Volatility and Risk

Financial Institutions has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, Flagstar Financial has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.

Dividends

Financial Institutions pays an annual dividend of $1.24 per share and has a dividend yield of 4.6%. Flagstar Financial pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Financial Institutions pays out -81.6% of its earnings in the form of a dividend. Flagstar Financial pays out -2.4% 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 increased its dividend for 1 consecutive years. Financial Institutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

60.5% of Financial Institutions shares are owned by institutional investors. Comparatively, 67.9% of Flagstar Financial shares are owned by institutional investors. 2.4% of Financial Institutions shares are owned by company insiders. Comparatively, 19.4% of Flagstar Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Financial Institutions and Flagstar Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Financial Institutions	$366.61 million	1.49	-$41.65 million	($1.52)	-17.82
Flagstar Financial	$6.35 billion	0.79	-$1.12 billion	($1.65)	-7.28

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

Summary

Financial Institutions beats Flagstar Financial on 11 of the 17 factors compared between the two stocks.

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 Flagstar Financial

Flagstar Financial, Inc. operates as the bank holding company for Flagstar Bank, N.A. that provides banking products and services in the United States. The company’s deposit products include interest-bearing checking and money market, savings, non-interest-bearing, and retirement accounts, as well as certificates of deposit. Its loan products comprise multi-family loans; commercial real estate loans; acquisition, development, and construction loans; commercial and industrial loans; one-to-four family loans; specialty finance loans and leases; warehouse loans; and other loans, such as home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans, and other consumer loans, including overdraft loans. The company offers cash management products; non-deposit investment and insurance products; and online banking, mobile banking, and bank-by-phone services. It primarily serves individuals, small and mid-size businesses, and professional associations. The company was formerly known as New York Community Bancorp, Inc. and changed its name to Flagstar Financial, Inc. in October 2024. Flagstar Financial, Inc. was founded in 1859 and is headquartered in Hicksville, New York.