Critical Contrast: WaFd (NASDAQ:WAFD) & Western Alliance Bancorporation (NYSE:WAL)

Western Alliance Bancorporation (NYSE:WAL) and WaFd (NASDAQ:WAFD) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, valuation, institutional ownership, earnings and dividends.

Risk & Volatility

Western Alliance Bancorporation has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500. Comparatively, WaFd has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Earnings & Valuation

This table compares Western Alliance Bancorporation and WaFd”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Alliance Bancorporation	$5.37 billion	1.67	$969.00 million	$8.59	9.58
WaFd	$1.41 billion	2.00	$226.07 million	$3.17	12.03

Western Alliance Bancorporation has higher revenue and earnings than WaFd. Western Alliance Bancorporation is trading at a lower price-to-earnings ratio than WaFd, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

79.2% of Western Alliance Bancorporation shares are owned by institutional investors. Comparatively, 83.7% of WaFd shares are owned by institutional investors. 2.8% of Western Alliance Bancorporation shares are owned by company insiders. Comparatively, 1.5% of WaFd shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Western Alliance Bancorporation and WaFd’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Alliance Bancorporation	17.03%	13.58%	1.09%
WaFd	18.47%	8.98%	0.89%

Analyst Ratings

This is a summary of recent ratings for Western Alliance Bancorporation and WaFd, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Alliance Bancorporation	0	4	10	0	2.71
WaFd	0	5	1	0	2.17

Western Alliance Bancorporation presently has a consensus price target of $94.00, indicating a potential upside of 14.27%. WaFd has a consensus price target of $34.80, indicating a potential downside of 8.71%. Given Western Alliance Bancorporation’s stronger consensus rating and higher probable upside, research analysts clearly believe Western Alliance Bancorporation is more favorable than WaFd.

Dividends

Western Alliance Bancorporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.0%. WaFd pays an annual dividend of $1.08 per share and has a dividend yield of 2.8%. Western Alliance Bancorporation pays out 19.6% of its earnings in the form of a dividend. WaFd pays out 34.1% 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. Western Alliance Bancorporation has raised its dividend for 5 consecutive years and WaFd has raised its dividend for 2 consecutive years.

Summary

Western Alliance Bancorporation beats WaFd on 12 of the 17 factors compared between the two stocks.

About Western Alliance Bancorporation

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.

About WaFd

WaFd, Inc operates as the bank holding company for Washington Federal Bank that provides lending, depository, insurance, and other banking services in the United States. The company offers deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts. It also provides single-family dwellings, construction, land acquisition and development, consumer lot, multi-family residential, commercial real estate, home equity, business, and consumer loans, as well as commercial and industrial loans. In addition, the company offers insurance brokerage services, such as individual and business insurance policies; holds and markets real estate properties; and debit and credit cards, as well as acts as the trustee. It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate. The company was formerly known as Washington Federal, Inc. and changed its name to WaFd, Inc in September 2023. WaFd, Inc was founded in 1917 and is headquartered in Seattle, Washington.