CBTX (NASDAQ:CBTX) versus Citigroup (NASDAQ:C) Critical Analysis

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Citigroup (NYSE:C) and CBTX (NASDAQ:CBTX) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Risk and Volatility

Citigroup has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500. Comparatively, CBTX has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Dividends

Citigroup pays an annual dividend of $1.80 per share and has a dividend yield of 2.7%. CBTX pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. Citigroup pays out 27.1% of its earnings in the form of a dividend. CBTX pays out 21.2% 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. Citigroup has increased its dividend for 4 consecutive years. Citigroup is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings for Citigroup and CBTX, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Citigroup 0 2 16 0 2.89
CBTX 0 2 0 0 2.00

Citigroup presently has a consensus price target of $79.48, indicating a potential upside of 17.09%. CBTX has a consensus price target of $35.00, indicating a potential upside of 25.76%. Given CBTX’s higher probable upside, analysts plainly believe CBTX is more favorable than Citigroup.

Institutional & Insider Ownership

76.1% of Citigroup shares are owned by institutional investors. Comparatively, 28.8% of CBTX shares are owned by institutional investors. 0.1% of Citigroup shares are owned by company insiders. Comparatively, 29.2% of CBTX 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.

Profitability

This table compares Citigroup and CBTX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Citigroup 18.32% 10.05% 0.94%
CBTX 31.19% 10.14% 1.51%

Earnings & Valuation

This table compares Citigroup and CBTX’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Citigroup $97.12 billion 1.62 $18.05 billion $6.65 10.21
CBTX $137.51 million 5.26 $47.29 million $1.89 14.72

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

Summary

Citigroup beats CBTX on 9 of the 17 factors compared between the two stocks.

About Citigroup

Citigroup Inc., a diversified financial services holding company, provides various financial products and services for consumers, corporations, governments, and institutions in North America, Latin America, Asia, Europe, the Middle East, and Africa. The company operates through two segments, Global Consumer Banking (GCB) and Institutional Clients Group (ICG). The GCB segment offers traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards, and Citi retail services. It also provides various banking, credit card lending, and investment services through a network of local branches, offices, and electronic delivery systems. The ICG segment provides wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate and consumer loans, investment banking and advisory services, private banking, cash management, trade finance, and securities services to corporate, institutional, public sector, and high-net-worth clients. As of December 31, 2018, it operated 2,410 branches in the United States, Mexico, and Asia. Citigroup Inc. was founded in 1812 and is headquartered in New York, New York.

About CBTX

CBTX, Inc. operates as the bank holding company for CommunityBank of Texas, National Association that provides commercial banking solutions to small and mid-sized businesses, and professionals in the United States. The company offers various deposit products, including demand, savings, money market, and time accounts; and loans, such as commercial and industrial loans, commercial real estate loans, construction and development loans, 1-4 family residential mortgage loans, multi-family residential loans, consumer loans, and agricultural loans. It also provides treasury and online banking services. CBTX, Inc. operates 35 banking locations, including 19 branches in Houston; 15 branches in Beaumont; and 1 branch in Dallas. The company was formerly known as CBFH, Inc. and changed its name to CBTX, Inc. in September 2017. CBTX, Inc. was founded in 2007 and is based in Houston, Texas.

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