Financial Analysis: Axos Financial (AX) & People’s United Financial (PBCT)

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

Institutional and Insider Ownership

75.9% of Axos Financial shares are held by institutional investors. Comparatively, 77.5% of People’s United Financial shares are held by institutional investors. 6.5% of Axos Financial shares are held by company insiders. Comparatively, 2.5% of People’s United Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Axos Financial has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, People’s United Financial has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.

Dividends

People’s United Financial pays an annual dividend of $0.70 per share and has a dividend yield of 4.1%. Axos Financial does not pay a dividend. People’s United Financial pays out 53.4% of its earnings in the form of a dividend. People’s United Financial has raised its dividend for 12 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Axos Financial 27.70% 17.25% 1.70%
People’s United Financial 24.34% 8.11% 1.04%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Axos Financial and People’s United Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Axos Financial 0 0 4 1 3.20
People’s United Financial 0 4 3 0 2.43

Axos Financial presently has a consensus target price of $41.20, suggesting a potential upside of 33.29%. People’s United Financial has a consensus target price of $19.88, suggesting a potential upside of 17.12%. Given Axos Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Axos Financial is more favorable than People’s United Financial.

Earnings & Valuation

This table compares Axos Financial and People’s United Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Axos Financial $546.02 million 3.47 $152.41 million $2.48 12.46
People’s United Financial $1.92 billion 3.34 $468.10 million $1.31 12.95

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

Summary

Axos Financial beats People’s United Financial on 11 of the 18 factors compared between the two stocks.

About Axos Financial

Axos Financial, Inc. operates as the holding company for BofI Federal Bank that provides consumer and business banking products in the United States. The company offers deposits products, including consumer and business checking, demand, savings, and time deposit accounts. It also provides single family and multifamily mortgage secured lending products; commercial real estate secured and commercial lending products; specialty finance factoring products; prime loans to customers secured by new and used automobiles; and term unsecured personal loans to individual borrowers, as well as overdraft lines of credit. In addition, the company offers prepaid card and refund transfer, debit card or ATM card, portfolio management, online bill payment, money transfer, overdraft protection, online and mobile banking, and text message banking services. The company was formerly known as BofI Holding, Inc. and changed its name to Axos Financial, Inc. in September 2018. Axos Financial, Inc. was incorporated in 1999 and is based in San Diego, California.

About People’s United Financial

People's United Financial, Inc. operates as the bank holding company for People's United Bank, National Association that provides commercial banking, retail banking, and wealth management services to individual, corporate, and municipal customers. The company operates in two segments, Commercial Banking and Retail Banking. The Commercial Banking segment offers commercial real estate lending, commercial and industrial lending, and commercial deposit gathering services. This segment also provides equipment financing; cash management, correspondent banking, and municipal banking services; and institutional trust, corporate trust, private banking, and insurance services. The Retail Banking segment offers consumer lending, including residential mortgage and home equity lending; and consumer deposit gathering services. This segment also provides brokerage, financial advisory, investment management, life insurance, and non-institutional trust services. In addition, the company offers online banking, investment trading, and telephone banking services. It operates through a network of 403 branches, including 147 full-service stop and shop supermarket branches located in Connecticut, southeastern New York, Massachusetts, Vermont, Maine, and New Hampshire, as well as 598 ATMs. People's United Financial, Inc. was founded in 1842 and is headquartered in Bridgeport, Connecticut.

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