Critical Survey: Berkshire Hills Bancorp (BHLB) vs. People’s United Financial (PBCT)

Berkshire Hills Bancorp (NYSE: BHLB) and People’s United Financial (NASDAQ:PBCT) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Dividends

Berkshire Hills Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. People’s United Financial pays an annual dividend of $0.69 per share and has a dividend yield of 3.8%. Berkshire Hills Bancorp pays out 46.2% of its earnings in the form of a dividend. People’s United Financial pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Berkshire Hills Bancorp has increased its dividend for 2 consecutive years and People’s United Financial has increased its dividend for 10 consecutive years. People’s United Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Berkshire Hills Bancorp has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, People’s United Financial has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Berkshire Hills Bancorp and People’s United Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Berkshire Hills Bancorp 0 2 3 0 2.60
People’s United Financial 2 9 0 0 1.82

Berkshire Hills Bancorp presently has a consensus target price of $37.70, indicating a potential downside of 1.69%. People’s United Financial has a consensus target price of $18.31, indicating a potential upside of 0.36%. Given People’s United Financial’s higher probable upside, analysts plainly believe People’s United Financial is more favorable than Berkshire Hills Bancorp.

Valuation & Earnings

This table compares Berkshire Hills Bancorp and People’s United Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Berkshire Hills Bancorp $336.88 million 4.55 $72.74 million $1.82 21.07
People’s United Financial $1.34 billion 4.59 $300.38 million $0.89 20.49

People’s United Financial has higher revenue and earnings than Berkshire Hills Bancorp. People’s United Financial is trading at a lower price-to-earnings ratio than Berkshire Hills Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Berkshire Hills Bancorp and People’s United Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Berkshire Hills Bancorp 15.03% 6.93% 0.85%
People’s United Financial 18.88% 6.14% 0.75%

Insider & Institutional Ownership

74.1% of Berkshire Hills Bancorp shares are held by institutional investors. Comparatively, 77.3% of People’s United Financial shares are held by institutional investors. 2.8% of Berkshire Hills Bancorp shares are held by insiders. Comparatively, 2.7% of People’s United Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

People’s United Financial beats Berkshire Hills Bancorp on 9 of the 17 factors compared between the two stocks.

Berkshire Hills Bancorp Company Profile

Berkshire Hills Bancorp, Inc. (Berkshire) is a holding company for Berkshire Bank (the Bank) and Berkshire Insurance Group. Berkshire offers a range of deposit, lending, insurance and wealth management products to retail, commercial, not-for-profit and municipal customers in its market areas. Berkshire product offerings also include retail and commercial electronic banking, commercial cash management and commercial interest rate swaps. The Bank’s loan portfolio consists of commercial loans, which include residential mortgages, commercial real estate, commercial and industrial loans, and consumer loans. The Bank’s securities available for sale include municipal bonds and obligations, mortgage-backed securities, other bonds and obligations, and marketable equity securities. As of December 5, 2016, the Bank had 99 full service branch offices in Massachusetts, New York, Connecticut, Vermont, New Jersey and Pennsylvania.

People’s United Financial Company Profile

People’s United Financial, Inc. is a bank holding company and a financial holding company of People’s United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

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