BB&T Corporation (NYSE:BBT) shares are up more than 5.23% this year and recently decreased -0.12% or -$0.06 to settle at $49.48. F.N.B. Corporation (NYSE:FNB), on the other hand, is down -15.72% year to date as of 11/06/2017. It currently trades at $13.51 and has returned -0.30% during the past week.

BB&T Corporation (NYSE:BBT) and F.N.B. Corporation (NYSE:FNB) are the two most active stocks in the Regional – Southeast Banks industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.

**Growth**

Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect BBT to grow earnings at a 6.22% annual rate over the next 5 years. Comparatively, FNB is expected to grow at a 9.50% annual rate. All else equal, FNB’s higher growth rate would imply a greater potential for capital appreciation.

**Profitability and Returns**

Just, if not more, important than the growth rate is the quality of that growth. Growth can actual be harmful to investors if it comes at the cost of weak profitability and low returns. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return., compared to an EBITDA margin of 39.93% for F.N.B. Corporation (FNB). BBT’s ROI is 10.20% while FNB has a ROI of 11.50%. The interpretation is that FNB’s business generates a higher return on investment than BBT’s.

**Cash Flow **

Cash is king when it comes to investing. BBT’s free cash flow (“FCF”) per share for the trailing twelve months was +0.93. Comparatively, FNB’s free cash flow per share was -. On a percent-of-sales basis, BBT’s free cash flow was 6.36% while FNB converted 0% of its revenues into cash flow. This means that, for a given level of sales, BBT is able to generate more free cash flow for investors.

**Financial Risk**

BBT’s debt-to-equity ratio is 0.69 versus a D/E of 0.50 for FNB. BBT is therefore the more solvent of the two companies, and has lower financial risk.

**Valuation**

BBT trades at a forward P/E of 14.45, a P/B of 1.47, and a P/S of 5.41, compared to a forward P/E of 12.97, a P/B of 1.02, and a P/S of 4.93 for FNB. BBT is the expensive of the two stocks on an earnings, book value and sales basis. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.

**Analyst Price Targets and Opinions**

Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. BBT is currently priced at a 1.41% to its one-year price target of 48.79. Comparatively, FNB is -14.6% relative to its price target of 15.82. This suggests that FNB is the better investment over the next year.

The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.60 for BBT and 1.70 for FNB, which implies that analysts are more bullish on the outlook for BBT.

**Risk and Volatility**

Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. BBT has a beta of 0.99 and FNB’s beta is 0.93. FNB’s shares are therefore the less volatile of the two stocks.

**Insider Activity and Investor Sentiment**

Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. BBT has a short ratio of 4.45 compared to a short interest of 6.08 for FNB. This implies that the market is currently less bearish on the outlook for BBT.

**Summary**

F.N.B. Corporation (NYSE:FNB) beats BB&T Corporation (NYSE:BBT) on a total of 9 of the 14 factors compared between the two stocks. FNB is more profitable, generates a higher return on investment and has lower financial risk. In terms of valuation, FNB is the cheaper of the two stocks on an earnings, book value and sales basis, FNB is more undervalued relative to its price target. Finally, RF has better sentiment signals based on short interest.