Analyzing Trustmark (NASDAQ:TRMK) and Pathward Financial (NASDAQ:CASH)

Pathward Financial (NASDAQ:CASH) and Trustmark (NASDAQ:TRMK) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Pathward Financial and Trustmark’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pathward Financial	21.65%	21.86%	2.21%
Trustmark	17.62%	9.48%	0.92%

Volatility and Risk

Pathward Financial has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Trustmark has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500.

Dividends

Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Trustmark pays an annual dividend of $0.92 per share and has a dividend yield of 2.6%. Pathward Financial pays out 3.0% of its earnings in the form of a dividend. Trustmark pays out 27.8% 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.

Earnings and Valuation

This table compares Pathward Financial and Trustmark”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pathward Financial	$604.96 million	3.02	$168.36 million	$6.63	11.41
Trustmark	$488.64 million	4.35	$165.49 million	$3.31	10.50

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

Insider & Institutional Ownership

92.7% of Pathward Financial shares are held by institutional investors. Comparatively, 67.6% of Trustmark shares are held by institutional investors. 0.7% of Pathward Financial shares are held by company insiders. Comparatively, 1.5% of Trustmark shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and price targets for Pathward Financial and Trustmark, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pathward Financial	0	1	1	0	2.50
Trustmark	0	4	1	0	2.20

Pathward Financial presently has a consensus target price of $92.00, suggesting a potential upside of 21.56%. Trustmark has a consensus target price of $35.20, suggesting a potential upside of 1.27%. Given Pathward Financial’s stronger consensus rating and higher possible upside, equities analysts clearly believe Pathward Financial is more favorable than Trustmark.

Summary

Pathward Financial beats Trustmark on 11 of the 15 factors compared between the two stocks.

About Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.

About Trustmark

Trustmark Corporation operates as the bank holding company for Trustmark National Bank that provides banking and other financial solutions to individuals and corporate institutions in the United States. The company operates through three segments: General Banking, Wealth Management, and Insurance. It offers checking, savings, and money market accounts; certificates of deposits and individual retirement accounts; financing for commercial and industrial projects, income-producing commercial real estate, owner-occupied real estate, and construction and land development; and installment and real estate loans, and lines of credit, as well as treasury management services. The company also provides mortgage banking services, including construction financing, production of conventional and government-insured mortgages, and secondary marketing and mortgage servicing. In addition, it provides wealth management and trust services, such as administration of personal trusts and estates; management of investment accounts for individuals, employee benefit plans, and charitable foundations; and corporate trust and institutional custody, securities brokerage, financial and estate planning, retirement plan, and investment management services. Further, the company offers business insurance products and services for medical professionals, construction, manufacturing, hospitality, real estate, and group life and health plans; and life and health insurance, and personal line policies for individual customers. Trustmark Corporation was founded in 1889 and is headquartered in Jackson, Mississippi.