Northwest Bancshares (NASDAQ:NWBI) and Bank of America (NYSE:BAC) Head-To-Head Analysis

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Northwest Bancshares (NASDAQ:NWBIGet Rating) and Bank of America (NYSE:BACGet Rating) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Volatility & Risk

Northwest Bancshares has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, Bank of America has a beta of 1.39, suggesting that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Northwest Bancshares and Bank of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northwest Bancshares 26.19% 9.12% 0.99%
Bank of America 32.84% 12.55% 0.99%

Valuation and Earnings

This table compares Northwest Bancshares and Bank of America’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Northwest Bancshares $561.40 million 2.79 $154.32 million $1.11 11.13
Bank of America $93.85 billion 3.22 $31.98 billion $3.50 10.70

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

Dividends

Northwest Bancshares pays an annual dividend of $0.80 per share and has a dividend yield of 6.5%. Bank of America pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. Northwest Bancshares pays out 72.1% of its earnings in the form of a dividend. Bank of America pays out 24.0% 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. Northwest Bancshares has raised its dividend for 13 consecutive years and Bank of America has raised its dividend for 1 consecutive years. Northwest Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Northwest Bancshares and Bank of America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northwest Bancshares 1 3 0 0 1.75
Bank of America 0 7 13 0 2.65

Northwest Bancshares currently has a consensus target price of $13.01, indicating a potential upside of 5.32%. Bank of America has a consensus target price of $50.38, indicating a potential upside of 34.53%. Given Bank of America’s stronger consensus rating and higher possible upside, analysts plainly believe Bank of America is more favorable than Northwest Bancshares.

Institutional and Insider Ownership

61.2% of Northwest Bancshares shares are owned by institutional investors. Comparatively, 70.5% of Bank of America shares are owned by institutional investors. 1.0% of Northwest Bancshares shares are owned by company insiders. Comparatively, 0.3% of Bank of America shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Bank of America beats Northwest Bancshares on 12 of the 16 factors compared between the two stocks.

Northwest Bancshares Company Profile (Get Rating)

Northwest Bancshares, Inc. operates as the holding company for Northwest Bank, a state-chartered savings bank that provides personal and business banking solutions. The company accepts various deposits, including checking, savings, money market deposit, term certificate, and individual retirement accounts. It also offers loan products comprising one-to-four-family residential real estate loans and loans collateralized by multi-family residential and commercial real estate; commercial business loans; and consumer loans, including automobile loans, sales finance loans, unsecured personal loans, credit card loans, and loans secured by deposit accounts. The company also offers investment management and trust services. As of December 31, 2021, it operated 170 community-banking locations in Pennsylvania, Western New York, Eastern Ohio, and Indiana. Northwest Bancshares, Inc. was founded in 1896 and is headquartered in Columbus, Ohio.

Bank of America Company Profile (Get Rating)

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. Its Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, noninterest-and interest-bearing checking accounts, and investment accounts and products; and credit and debit cards, residential mortgages, and home equity loans, as well as direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The company’s Global Wealth & Investment Management segment offers investment management, brokerage, banking, and trust and retirement products and services; and wealth management solutions, as well as customized solutions, including specialty asset management services. Its Global Banking segment provides lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, and short-term investing options and merchant services; working capital management solutions; and debt and equity underwriting and distribution, and merger-related and other advisory services. The company’s Global Markets segment offers market-making, financing, securities clearing, settlement, and custody services, as well as risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. As of December 31, 2021, it served approximately 67 million consumer and small business clients with approximately 4,200 retail financial centers; approximately 16,000 ATMs; and digital banking platforms with approximately 41 million active users. The company was founded in 1784 and is based in Charlotte, North Carolina.

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