First Horizon (NYSE:FHN) & Washington Federal (NASDAQ:WAFD) Head to Head Comparison

First Horizon (NYSE:FHN) and Washington Federal (NASDAQ:WAFD) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Volatility & Risk

First Horizon has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Washington Federal has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Earnings and Valuation

This table compares First Horizon and Washington Federal’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Horizon $3.39 billion 2.82 $845.00 million $1.22 14.16
Washington Federal $708.22 million 3.26 $173.44 million $2.00 15.93

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

Dividends

First Horizon pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Washington Federal pays an annual dividend of $0.92 per share and has a dividend yield of 2.9%. First Horizon pays out 49.2% of its earnings in the form of a dividend. Washington Federal pays out 46.0% 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 Horizon has increased its dividend for 6 consecutive years and Washington Federal has increased its dividend for 1 consecutive years. First Horizon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for First Horizon and Washington Federal, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Horizon 0 2 6 1 2.89
Washington Federal 0 1 0 0 2.00

First Horizon currently has a consensus price target of $14.44, suggesting a potential downside of 16.41%. Washington Federal has a consensus price target of $22.00, suggesting a potential downside of 30.95%. Given First Horizon’s stronger consensus rating and higher probable upside, equities research analysts clearly believe First Horizon is more favorable than Washington Federal.

Insider & Institutional Ownership

81.1% of First Horizon shares are owned by institutional investors. Comparatively, 80.0% of Washington Federal shares are owned by institutional investors. 1.6% of First Horizon shares are owned by company insiders. Comparatively, 1.2% of Washington Federal shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares First Horizon and Washington Federal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Horizon 28.89% 11.68% 1.09%
Washington Federal 23.76% 7.56% 0.81%

Summary

First Horizon beats Washington Federal on 14 of the 18 factors compared between the two stocks.

About First Horizon

First Horizon Corporation operates as the bank holding company for First Horizon Bank that provides various financial services. The company operates through four segments: Regional Banking, Fixed Income, Corporate, and Non-Strategic. It offers general banking services for consumers, businesses, financial institutions, and governments. The company also underwrites bank-eligible securities and other fixed-income securities eligible for underwriting by financial subsidiaries; sells loans and derivatives; and offers advisory services. In addition, it offers various services, such as mortgage banking; title insurance and loan-closing; brokerage; correspondent banking; nationwide check clearing and remittance processing; trust, fiduciary, and agency; equipment finance; and investment and financial advisory services. Further, the company sells mutual fund and retail insurance products; and credit cards. It operates approximately 490 banking offices in 12 states under the First Horizon Bank brand; and 29 offices in 18 states under the FHN Financial brand in the United States. The company was formerly known as First Horizon National Corporation and changed its name to First Horizon Corporation in November 2020. First Horizon Corporation was founded in 1864 and is headquartered in Memphis, Tennessee.

About Washington Federal

Washington Federal, Inc. operates as the bank holding company for Washington Federal Bank, National Association that provides lending, depository, insurance, and other banking services in the United States. The company accepts deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts. It also provides single-family residential, construction, land acquisition and development, consumer lot, multi-family residential, commercial and industrial, commercial real estate, home equity, and consumer loans. In addition, the company offers insurance brokerage services, such as individual and business insurance policies to customers and general public; holds and markets real estate properties; mobile and internet banking services; debit and credit cards; and acts as trustee. It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate. As of September 30, 2020, the company had 234 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, and Texas. Washington Federal, Inc. was founded in 1917 and is headquartered in Seattle, Washington.

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