Contrasting KeyCorp (NYSE:KEY) & CBTX (NYSE:CBTX)

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

Profitability

This table compares KeyCorp and CBTX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KeyCorp 23.15% 12.82% 1.30%
CBTX 31.41% 10.54% 1.58%

Valuation & Earnings

This table compares KeyCorp and CBTX’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KeyCorp $7.39 billion 2.24 $1.87 billion $1.73 9.51
CBTX $137.51 million 5.38 $47.29 million $1.89 15.04

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

Dividends

KeyCorp pays an annual dividend of $0.68 per share and has a dividend yield of 4.1%. CBTX pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. KeyCorp pays out 39.3% of its earnings in the form of a dividend. CBTX pays out 21.2% 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. KeyCorp has increased its dividend for 8 consecutive years. KeyCorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings for KeyCorp and CBTX, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KeyCorp 1 11 9 0 2.38
CBTX 0 1 0 0 2.00

KeyCorp currently has a consensus price target of $23.20, suggesting a potential upside of 41.04%. CBTX has a consensus price target of $31.00, suggesting a potential upside of 9.08%. Given KeyCorp’s stronger consensus rating and higher possible upside, research analysts clearly believe KeyCorp is more favorable than CBTX.

Insider & Institutional Ownership

80.4% of KeyCorp shares are owned by institutional investors. Comparatively, 28.8% of CBTX shares are owned by institutional investors. 0.1% of KeyCorp shares are owned by company insiders. Comparatively, 29.2% of CBTX shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

KeyCorp has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, CBTX has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Summary

KeyCorp beats CBTX on 10 of the 17 factors compared between the two stocks.

KeyCorp Company Profile

KeyCorp operates as the holding company for KeyBank National Association that provides various retail and commercial banking services in the United States. The company's Key Community Bank segment offers various deposit and investment products, personal finance services, residential mortgages, home equity loans, credit cards, and installment loans. It also purchases retail auto-sales contracts through a network of auto dealership; offers financial, estate and retirement planning, asset management, and trust services, as well as portfolio management, life insurance, charitable giving, and related services for high-net-worth clients. In addition, this segment provides deposits, investment and credit products, and business advisory services to small businesses; and commercial lending, cash management, equipment leasing, and investment products, as well as employee benefit programs, succession planning, capital market access, derivatives, and foreign exchange services to mid-sized businesses. Its Key Corporate Bank segment offers 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 for middle market clients comprising consumer, energy, healthcare, industrial, public, real estate, and technology sectors. The company also offers securities underwriting, investment banking, and brokerage services. As of December 31, 2018, it offered its products and services through 1,159 retail banking branches and 1,505 automated teller machines in 15 states, as well as additional offices, online and mobile banking capabilities, and a telephone banking call center. KeyCorp was founded in 1849 and is headquartered in Cleveland, Ohio.

CBTX Company Profile

CBTX, Inc. operates as the bank holding company for CommunityBank of Texas, National Association that provides commercial banking solutions to small and mid-sized businesses, and professionals in the United States. The company offers various deposit products, including demand, savings, money market, and time accounts; and loans, such as commercial and industrial loans, commercial real estate loans, construction and development loans, 1-4 family residential mortgage loans, multi-family residential loans, consumer loans, and agricultural loans. It also provides treasury and online banking services. CBTX, Inc. operates 35 banking locations, including 19 branches in Houston; 15 branches in Beaumont; and 1 branch in Dallas. The company was formerly known as CBFH, Inc. and changed its name to CBTX, Inc. in September 2017. CBTX, Inc. was founded in 2007 and is based in Houston, Texas.

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