Contrasting Peapack-Gladstone Financial (NASDAQ:PGC) and Royal Bank of Canada (NYSE:RY)

Peapack-Gladstone Financial (NASDAQ:PGC) and Royal Bank of Canada (NYSE:RY) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of recent recommendations and price targets for Peapack-Gladstone Financial and Royal Bank of Canada, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peapack-Gladstone Financial	0	0	2	0	3.00
Royal Bank of Canada	0	2	5	1	2.88

Peapack-Gladstone Financial currently has a consensus price target of $39.50, suggesting a potential upside of 34.90%. Royal Bank of Canada has a consensus price target of $156.50, suggesting a potential upside of 36.99%. Given Royal Bank of Canada’s higher possible upside, analysts plainly believe Royal Bank of Canada is more favorable than Peapack-Gladstone Financial.

Dividends

Peapack-Gladstone Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.7%. Royal Bank of Canada pays an annual dividend of $4.09 per share and has a dividend yield of 3.6%. Peapack-Gladstone Financial pays out 10.8% of its earnings in the form of a dividend. Royal Bank of Canada 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. Royal Bank of Canada has raised its dividend for 15 consecutive years. Royal Bank of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Peapack-Gladstone Financial and Royal Bank of Canada”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peapack-Gladstone Financial	$224.11 million	2.30	$32.99 million	$1.85	15.83
Royal Bank of Canada	$60.46 billion	2.67	$11.92 billion	$8.90	12.84

Royal Bank of Canada has higher revenue and earnings than Peapack-Gladstone Financial. Royal Bank of Canada is trading at a lower price-to-earnings ratio than Peapack-Gladstone Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Peapack-Gladstone Financial and Royal Bank of Canada’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peapack-Gladstone Financial	8.11%	5.57%	0.50%
Royal Bank of Canada	12.08%	15.26%	0.84%

Risk & Volatility

Peapack-Gladstone Financial has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Royal Bank of Canada has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Insider and Institutional Ownership

72.8% of Peapack-Gladstone Financial shares are held by institutional investors. Comparatively, 45.3% of Royal Bank of Canada shares are held by institutional investors. 7.6% of Peapack-Gladstone Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Royal Bank of Canada beats Peapack-Gladstone Financial on 12 of the 18 factors compared between the two stocks.

About Peapack-Gladstone Financial

Peapack-Gladstone Financial Corporation operates as the bank holding company for Peapack-Gladstone Bank that provides private banking and wealth management services in the United States. The company operates in two segments, Banking and Peapack Private. It offers checking and savings accounts, money market and interest-bearing checking accounts, certificates of deposit, and individual retirement accounts. The company also provides working capital lines of credit, term loans for fixed asset acquisitions, commercial mortgages, multi-family mortgages, and other forms of asset-based financing services; and residential mortgages, home equity lines of credit, and other second mortgage loans. In addition, it offers corporate and industrial (C&I) and equipment finance, commercial real estate, multifamily, residential, and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; investment management services; personal trust services, including services as executor, trustee, administrator, custodian, and guardian; and other financial planning, tax preparation, and advisory services. Further, the company provides telephone and Internet banking, merchant credit card, and customer support sales services. Its private banking clients include businesses, non-profits, and consumers; wealth management clients comprise individuals, families, foundations, endowments, trusts, and estates; and commercial loan clients include business owners, professionals, retailers, contractors, and real estate investors. The company operates its private banking locations in Bedminster, Morristown, Princeton, and Teaneck, New Jersey; and branches in Somerset, Morris, Hunterdon, and Union counties, as well as operates automated teller machines. Peapack-Gladstone Financial Corporation was founded in 1921 and is headquartered in Bedminster, New Jersey.

About Royal Bank of Canada

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of wealth, investment, trust, banking, credit, and other advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients; asset management products to institutional and individual clients; and asset and investor services to financial institutions, asset managers, and asset owners. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, property and casualty, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital platforms; and independent brokers and partners. The company's Capital Markets segment offers advisory and origination, sales and trading, lending and financing, and transaction banking services to corporations, institutional clients, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.