Head to Head Review: Brookline Bancorp (BRKL) and Provident Financial Services (PFS)

Brookline Bancorp (NASDAQ: BRKL) and Provident Financial Services (NYSE:PFS) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

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This table compares Brookline Bancorp and Provident Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brookline Bancorp 17.11% 7.58% 0.89%
Provident Financial Services 24.75% 7.61% 1.02%

Institutional and Insider Ownership

78.5% of Brookline Bancorp shares are owned by institutional investors. Comparatively, 66.3% of Provident Financial Services shares are owned by institutional investors. 2.9% of Brookline Bancorp shares are owned by insiders. Comparatively, 3.0% of Provident Financial Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Brookline Bancorp has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.

Dividends

Brookline Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.2%. Provident Financial Services pays an annual dividend of $0.80 per share and has a dividend yield of 3.1%. Brookline Bancorp pays out 45.0% of its earnings in the form of a dividend. Provident Financial Services pays out 52.6% 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. Provident Financial Services has increased its dividend for 7 consecutive years. Provident Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Brookline Bancorp and Provident Financial Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brookline Bancorp $295.22 million 4.39 $50.51 million $0.80 20.19
Provident Financial Services $379.54 million 4.54 $93.94 million $1.52 16.96

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Brookline Bancorp and Provident Financial Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brookline Bancorp 0 3 0 0 2.00
Provident Financial Services 0 4 2 0 2.33

Brookline Bancorp presently has a consensus price target of $16.33, indicating a potential upside of 1.14%. Provident Financial Services has a consensus price target of $28.10, indicating a potential upside of 9.00%. Given Provident Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Provident Financial Services is more favorable than Brookline Bancorp.

Summary

Provident Financial Services beats Brookline Bancorp on 14 of the 17 factors compared between the two stocks.

About Brookline Bancorp

Brookline Bancorp, Inc. operates as the holding company for Brookline Bank, Bank Rhode Island, First Ipswich Bank, and Brookline Securities Corp that provide commercial, business, and retail banking services to corporate, municipal, and retail customers in the United States. Its deposit products include non-interest-bearing demand checking accounts, NOW accounts, savings accounts, and money market accounts. The company's loan portfolio comprises first mortgage loans secured by commercial, multi-family, and residential real estate properties; loans to business entities comprising commercial lines of credit; loans to condominium associations; loans and leases used to finance equipment used by small businesses; financing for construction and development projects; and home equity and other consumer loans. It also provides cash management, investment advisory, and online banking services, as well as invests in debt and equity securities. As of December 31, 2017, the Company operated 51 full-service banking offices in greater Boston, the north shore of Massachusetts, and Rhode Island. Brookline Bancorp, Inc. was founded in 1871 and is headquartered in Boston, Massachusetts.

About Provident Financial Services

Provident Financial Services, Inc. operates as the holding company for Provident Bank that provides various banking services to individuals, families, and businesses in the United States. Its deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA and KEOGH accounts. The company's loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, and retail and industrial properties; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, and marine loans. It also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, the company provides trust and estate administrative services; and asset management services comprising investment management, asset allocation, trust and fiduciary, financial and tax planning, family office, estate settlement, and custody services to individuals, municipalities, non-profits, corporations, and pension funds. Further, it sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure, as well as offers investment advisory services. As of December 31, 2017, the company operated 84 full-service branch offices in northern and central New Jersey, as well as in Pennsylvania. Provident Financial Services, Inc. was founded in 1839 and is headquartered in Jersey City, New Jersey.

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