Critical Analysis: Community Bank System (NYSE:CBU) versus U.S. Bancorp (NYSE:USB)

Community Bank System (NYSE:CBU) and U.S. Bancorp (NYSE:USB) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Institutional & Insider Ownership

73.8% of Community Bank System shares are owned by institutional investors. Comparatively, 77.6% of U.S. Bancorp shares are owned by institutional investors. 1.8% of Community Bank System shares are owned by company insiders. Comparatively, 0.2% of U.S. Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Community Bank System and U.S. Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Bank System	$940.71 million	3.73	$182.48 million	$3.44	19.42
U.S. Bancorp	$42.71 billion	1.72	$6.30 billion	$3.79	12.43

U.S. Bancorp has higher revenue and earnings than Community Bank System. U.S. Bancorp is trading at a lower price-to-earnings ratio than Community Bank System, indicating that it is currently the more affordable of the two stocks.

Dividends

Community Bank System pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. U.S. Bancorp pays an annual dividend of $2.00 per share and has a dividend yield of 4.2%. Community Bank System pays out 53.5% of its earnings in the form of a dividend. U.S. Bancorp pays out 52.8% 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. Community Bank System has increased its dividend for 21 consecutive years and U.S. Bancorp has increased its dividend for 15 consecutive years. U.S. Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and target prices for Community Bank System and U.S. Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Bank System	0	3	0	1	2.50
U.S. Bancorp	0	9	11	0	2.55

Community Bank System currently has a consensus target price of $65.75, suggesting a potential downside of 1.57%. U.S. Bancorp has a consensus target price of $54.21, suggesting a potential upside of 15.05%. Given U.S. Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe U.S. Bancorp is more favorable than Community Bank System.

Profitability

This table compares Community Bank System and U.S. Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community Bank System	19.40%	10.94%	1.17%
U.S. Bancorp	14.75%	12.94%	0.97%

Volatility & Risk

Community Bank System has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, U.S. Bancorp has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Summary

U.S. Bancorp beats Community Bank System on 11 of the 18 factors compared between the two stocks.

About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and other financial services to retail, commercial, institutional, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as interest and noninterest -bearing checking, savings, and money market deposit accounts, as well as time deposits. It also provides loans, including consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; paycheck protection program loans; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and check credit lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory; cash management, investment, and treasury services; asset management services; and employee benefit services, as well as operates as a full-service insurance agency that provides personal and commercial lines of insurance, and other risk management products and services. Further, it offers contribution plan administration, employee benefit trust, collective investment fund, retirement plan administration and benefit consulting, fund administration, transfer agency, actuarial and benefit consulting, and health and welfare consulting services; and act as an investor in residential and commercial real estate activities. Additionally, the company offers wealth management, retirement planning, higher educational planning, fiduciary, risk management, trust, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and insurance and advisory products, as well as master recordkeeping services. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.

About U.S. Bancorp

U.S. Bancorp, a financial services holding company, provides various financial services to individuals, businesses, institutional organizations, governmental entities, and other financial institutions in the United States. It operates through Wealth, Corporate, Commercial and Institutional Banking; Consumer and Business Banking; Payment Services; and Treasury and Corporate Support segments. The company offers depository services, including checking accounts, savings accounts, and time certificate contracts; and lending services, such as traditional credit products and credit card services, lease financing and import/export trade, asset-backed lending, agricultural finance, and other products. It also provides ancillary services comprising capital markets, treasury management, and receivable lock-box collection services to corporate and governmental entity customers. In addition, the company offers asset management and fiduciary services for individuals, estates, foundations, business corporations, and charitable organizations. Further, it provides investment and insurance products to its customers principally within its domestic markets, as well as fund administration services to mutual and other funds. Additionally, the company provides corporate and purchasing card, and corporate trust services. Furthermore, it offers trust and investment management, merchant and ATM processing, mortgage banking, insurance, and brokerage and leasing services. U.S. Bancorp was founded in 1863 and is headquartered in Minneapolis, Minnesota.