Reviewing First Commonwealth Financial (NYSE:FCF) and KeyCorp (NYSE:KEY)

KeyCorp (NYSE:KEY) and First Commonwealth Financial (NYSE:FCF) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Profitability

This table compares KeyCorp and First Commonwealth Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KeyCorp	-2.52%	8.73%	0.63%
First Commonwealth Financial	20.38%	10.36%	1.22%

Valuation and Earnings

This table compares KeyCorp and First Commonwealth Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KeyCorp	$4.64 billion	3.69	-$161.00 million	($0.17)	-91.82
First Commonwealth Financial	$479.86 million	3.41	$142.57 million	$1.34	11.65

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

Dividends

KeyCorp pays an annual dividend of $0.82 per share and has a dividend yield of 5.3%. First Commonwealth Financial pays an annual dividend of $0.54 per share and has a dividend yield of 3.5%. KeyCorp pays out -482.4% of its earnings in the form of a dividend. First Commonwealth Financial pays out 40.3% 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. First Commonwealth Financial has raised its dividend for 9 consecutive years. KeyCorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

KeyCorp has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, First Commonwealth Financial has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.

Institutional & Insider Ownership

79.7% of KeyCorp shares are owned by institutional investors. Comparatively, 72.6% of First Commonwealth Financial shares are owned by institutional investors. 0.5% of KeyCorp shares are owned by company insiders. Comparatively, 2.2% of First Commonwealth Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for KeyCorp and First Commonwealth Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KeyCorp	0	10	9	1	2.55
First Commonwealth Financial	0	3	3	0	2.50

KeyCorp currently has a consensus price target of $18.86, suggesting a potential upside of 20.83%. First Commonwealth Financial has a consensus price target of $18.92, suggesting a potential upside of 21.15%. Given First Commonwealth Financial’s higher probable upside, analysts clearly believe First Commonwealth Financial is more favorable than KeyCorp.

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 First Commonwealth Financial

First Commonwealth Financial Corporation, a financial holding company, provides various consumer and commercial banking services in the United States. Its consumer services include personal checking accounts, interest-earning checking accounts, savings and health savings accounts, insured money market accounts, debit cards, investment certificates, fixed and variable rate certificates of deposit, mortgage loans, secured and unsecured installment loans, construction and real estate loans, safe deposit facilities, credit cards, credit lines with overdraft checking protection, IRA accounts, and automated teller machine (atm) services, as well as internet, mobile, and telephone banking services. The company's commercial banking services comprise commercial lending, business checking accounts, online account management services, payroll direct deposits, commercial cash management services, and repurchase agreements, as well as ACH origination services. In addition, it offers various trust and asset management services; auto, home, and business insurance, as well as term life insurance; and annuities, mutual funds, and stock and bond brokerage services through a broker-dealer and insurance brokers. The company was founded in 1934 and is headquartered in Indiana, Pennsylvania.