Cullen/Frost Bankers (NYSE:CFR) & First Financial Bankshares (NASDAQ:FFIN) Head to Head Review

Cullen/Frost Bankers (NYSE:CFR) and First Financial Bankshares (NASDAQ:FFIN) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Dividends

Cullen/Frost Bankers pays an annual dividend of $4.00 per share and has a dividend yield of 3.2%. First Financial Bankshares pays an annual dividend of $0.76 per share and has a dividend yield of 2.4%. Cullen/Frost Bankers pays out 43.1% of its earnings in the form of a dividend. First Financial Bankshares pays out 44.2% 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 First Financial Bankshares has raised its dividend for 15 consecutive years. Cullen/Frost Bankers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Cullen/Frost Bankers and First Financial Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cullen/Frost Bankers	21.20%	15.46%	1.18%
First Financial Bankshares	31.01%	14.69%	1.75%

Earnings & Valuation

This table compares Cullen/Frost Bankers and First Financial Bankshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cullen/Frost Bankers	$2.85 billion	2.79	$582.54 million	$9.29	13.29
First Financial Bankshares	$578.01 million	7.89	$223.51 million	$1.72	18.52

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Cullen/Frost Bankers and First Financial Bankshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cullen/Frost Bankers	3	9	2	1	2.07
First Financial Bankshares	0	4	0	0	2.00

Cullen/Frost Bankers currently has a consensus target price of $137.62, indicating a potential upside of 11.44%. First Financial Bankshares has a consensus target price of $38.67, indicating a potential upside of 21.40%. Given First Financial Bankshares’ higher possible upside, analysts clearly believe First Financial Bankshares is more favorable than Cullen/Frost Bankers.

Volatility and Risk

Cullen/Frost Bankers has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, First Financial Bankshares has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Institutional and Insider Ownership

86.9% of Cullen/Frost Bankers shares are owned by institutional investors. Comparatively, 69.8% of First Financial Bankshares shares are owned by institutional investors. 2.9% of Cullen/Frost Bankers shares are owned by company insiders. Comparatively, 4.2% of First Financial Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Cullen/Frost Bankers beats First Financial Bankshares on 11 of the 18 factors compared between 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 First Financial Bankshares

First Financial Bankshares, Inc., through its subsidiaries, provides commercial banking products and services in Texas. The company offers checking, savings and time deposits; automated teller machines, drive-in, and night deposit services; safe deposit facilities, remote deposit capture, internet banking, mobile banking, payroll cards, funds transfer, and performing other customary commercial banking services; securities brokerage services; and trust and wealth management services, including wealth management, estates administration, oil and gas management, testamentary trusts, revocable and irrevocable trusts, and agency accounts. It also provides commercial and industrial, municipal, agricultural, construction and development, farm, residential, and consumer auto and non-auto, as well as non-owner occupied and owner occupied commercial real estate loans. In addition, the company offers advisory and specialized services related to asset management, investing, purchasing, advertising, public relations, and technology services. First Financial Bankshares, Inc. was founded in 1890 and is headquartered in Abilene, Texas.