Prosperity Bancshares (NYSE: PB) and First Community (NASDAQ:FCCO) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.
Institutional & Insider Ownership
77.8% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 41.1% of First Community shares are held by institutional investors. 4.9% of Prosperity Bancshares shares are held by insiders. Comparatively, 8.6% of First Community shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Risk & Volatility
Prosperity Bancshares has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, First Community has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.
Prosperity Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 1.9%. First Community pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. Prosperity Bancshares pays out 36.6% of its earnings in the form of a dividend. First Community pays out 47.1% 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. First Community has increased its dividend for 14 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Prosperity Bancshares and First Community’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of current ratings and target prices for Prosperity Bancshares and First Community, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Prosperity Bancshares presently has a consensus target price of $74.00, suggesting a potential downside of 3.55%. Given Prosperity Bancshares’ higher probable upside, equities analysts clearly believe Prosperity Bancshares is more favorable than First Community.
Earnings & Valuation
This table compares Prosperity Bancshares and First Community’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Prosperity Bancshares||$793.99 million||6.75||$272.16 million||$3.93||19.52|
|First Community||$41.79 million||3.90||$5.82 million||$0.85||25.24|
Prosperity Bancshares has higher revenue and earnings than First Community. Prosperity Bancshares is trading at a lower price-to-earnings ratio than First Community, indicating that it is currently the more affordable of the two stocks.
Prosperity Bancshares beats First Community on 12 of the 16 factors compared between the two stocks.
About Prosperity Bancshares
Prosperity Bancshares, Inc. is a financial holding company, which operates through its bank subsidiary, Prosperity Bank (the Bank). The Bank provides a range of financial products and services to small and medium-sized businesses and consumers. The Company, through the Bank, offers a range of loan and deposit products to its customers. At December 31, 2016, the Bank maintained approximately 598,400 separate deposit accounts including certificates of deposit and 53,600 separate loan accounts. It offered commercial real estate (including multifamily residential) and one- to four-family residential loans, as of December 31, 2016. As of December 31, 2016, the Bank operated 245 full service banking locations; 65 in the Houston area; 29 in the South Texas area; 36 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area; 34 in the West Texas area; 16 in the Bryan/College Station area, six in the Central Oklahoma area and eight in the Tulsa, Oklahoma area.
About First Community
First Community Corporation is a bank holding company for First Community Bank (the Bank). The Bank offers commercial and retail banking services to small-to-medium sized businesses, professional concerns and individuals, primarily in Richland, Lexington, Kershaw and Newberry Counties of South Carolina and the surrounding areas. The Bank offers a range of traditional banking products and services for professionals and small-to medium-sized businesses, including consumer and commercial, mortgage, brokerage and investment, and insurance services. The Bank also offers online banking to its customers. Its other services include Internet banking, cash management services, safe deposit boxes, traveler checks, direct deposit of payroll and social security checks, and automatic drafts for various accounts. The Bank offers non-deposit investment products and other investment brokerage services through a registered representative with an affiliation through LPL Financial.
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