Analyzing Prosperity Bancshares (NYSE:PB) and CVB Financial (NASDAQ:CVBF)

CVB Financial (NASDAQ:CVBF) and Prosperity Bancshares (NYSE:PB) are both mid-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, risk, institutional ownership, earnings, profitability, valuation and analyst recommendations.

Dividends

CVB Financial pays an annual dividend of $0.80 per share and has a dividend yield of 3.4%. Prosperity Bancshares pays an annual dividend of $2.32 per share and has a dividend yield of 2.8%. CVB Financial pays out 55.9% of its earnings in the form of a dividend. Prosperity Bancshares pays out 49.3% 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. Prosperity Bancshares has increased its dividend for 27 consecutive years.

Institutional & Insider Ownership

74.2% of CVB Financial shares are owned by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are owned by institutional investors. 6.0% of CVB Financial shares are owned by insiders. Comparatively, 4.3% of Prosperity Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares CVB Financial and Prosperity Bancshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CVB Financial	$665.66 million	4.91	$221.43 million	$1.43	16.38
Prosperity Bancshares	$1.11 billion	7.17	$419.32 million	$4.71	17.78

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

Risk & Volatility

CVB Financial has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares CVB Financial and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CVB Financial	28.29%	9.80%	1.30%
Prosperity Bancshares	25.39%	6.46%	1.18%

Analyst Ratings

This is a breakdown of current ratings and price targets for CVB Financial and Prosperity Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CVB Financial	0	4	2	0	2.33
Prosperity Bancshares	0	4	8	0	2.67

CVB Financial presently has a consensus price target of $20.80, suggesting a potential downside of 11.19%. Prosperity Bancshares has a consensus price target of $79.95, suggesting a potential downside of 4.51%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than CVB Financial.

Summary

Prosperity Bancshares beats CVB Financial on 12 of the 17 factors compared between the two stocks.

About CVB Financial

CVB Financial Corp. operates as a bank holding company for Citizens Business Bank, a state-chartered bank that provides banking and financial services to small to mid-sized businesses and individuals. It offers checking, savings, money market, and time certificates of deposit products for business and personal accounts; and serves as a federal tax depository for business customers. The company also provides commercial lending products comprising lines of credit and other working capital financing, accounts receivable lending, and letters of credit; agriculture loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers, and farmers; lease financing services for municipal governments; commercial real estate and construction loans; and consumer financing products, including automobile leasing and financing, lines of credit, credit cards, home mortgages, and home equity loans and lines of credit. In addition, it offers various specialized services, such as treasury management systems for monitoring cash flow, merchant card processing program, armored pick-up and delivery, payroll services, remote deposit capture, electronic funds transfers, wires and automated clearinghouse, and online account access. Further, the company provides trust services, such as fiduciary services, mutual funds, annuities, 401(k) plans, and individual investment accounts. CVB Financial Corp. was founded in 1974 and is headquartered in Ontario, California.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.