Reviewing Prosperity Bancshares (NYSE:PB) & Cullen/Frost Bankers (NYSE:CFR)

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

Insider & Institutional Ownership

86.9% of Cullen/Frost Bankers shares are owned by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are owned by institutional investors. 2.9% of Cullen/Frost Bankers shares are owned by insiders. Comparatively, 4.2% of Prosperity Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Cullen/Frost Bankers pays an annual dividend of $4.00 per share and has a dividend yield of 2.9%. Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.3%. Cullen/Frost Bankers pays out 41.2% of its earnings in the form of a dividend. Prosperity Bancshares pays out 42.8% 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. Cullen/Frost Bankers has raised its dividend for 32 consecutive years and Prosperity Bancshares has raised its dividend for 27 consecutive years.

Profitability

This table compares Cullen/Frost Bankers and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cullen/Frost Bankers	21.99%	15.84%	1.22%
Prosperity Bancshares	30.28%	7.06%	1.37%

Volatility & Risk

Cullen/Frost Bankers has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Cullen/Frost Bankers and Prosperity Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cullen/Frost Bankers	3	7	2	1	2.08
Prosperity Bancshares	0	6	8	0	2.57

Cullen/Frost Bankers currently has a consensus price target of $135.73, indicating a potential downside of 2.12%. Prosperity Bancshares has a consensus price target of $80.75, indicating a potential upside of 11.50%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than Cullen/Frost Bankers.

Valuation & Earnings

This table compares Cullen/Frost Bankers and Prosperity Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cullen/Frost Bankers	$2.85 billion	3.11	$582.54 million	$9.72	14.27
Prosperity Bancshares	$1.79 billion	3.84	$479.39 million	$5.61	12.91

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

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. operates as the bank holding company for Frost Bank that provides commercial and consumer banking services in Texas. The company offers commercial banking services to corporations, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; and treasury management services, as well as originates commercial leasing services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, first mortgage loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds transmitting, and foreign exchange services; correspondent banking activities, including check clearing, transfer of funds, fixed income security services, and securities custody and clearance services. Further, it offers trust, investment, agency, and custodial services for individual and corporate clients; capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and support for international business activities, including foreign exchange, letters of credit, export-import financing, and other related activities. Additionally, the company offers insurance and securities brokerage services; holding of securities for investment purposes; and investment management services for mutual funds, institutions, and individuals. It serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. The company was founded in 1868 and is headquartered in San Antonio, Texas.

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.