Analyzing Five Star Bancorp (NASDAQ:FSBC) & Sierra Bancorp (NASDAQ:BSRR)

Sierra Bancorp (NASDAQ:BSRR) and Five Star Bancorp (NASDAQ:FSBC) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares Sierra Bancorp and Five Star Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	19.70%	11.17%	1.08%
Five Star Bancorp	23.18%	13.88%	1.32%

Volatility & Risk

Sierra Bancorp has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, Five Star Bancorp has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sierra Bancorp and Five Star Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	2	2	0	2.50
Five Star Bancorp	0	2	5	0	2.71

Sierra Bancorp currently has a consensus price target of $34.50, suggesting a potential upside of 1.29%. Five Star Bancorp has a consensus price target of $39.40, suggesting a potential upside of 4.62%. Given Five Star Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Five Star Bancorp is more favorable than Sierra Bancorp.

Earnings and Valuation

This table compares Sierra Bancorp and Five Star Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sierra Bancorp	$203.87 million	2.22	$40.56 million	$2.87	11.87
Five Star Bancorp	$213.40 million	3.77	$45.67 million	$2.70	13.95

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

Insider & Institutional Ownership

55.4% of Sierra Bancorp shares are owned by institutional investors. Comparatively, 46.9% of Five Star Bancorp shares are owned by institutional investors. 11.6% of Sierra Bancorp shares are owned by insiders. Comparatively, 25.6% of Five Star Bancorp shares are owned 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.

Dividends

Sierra Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 2.9%. Five Star Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. Sierra Bancorp pays out 34.8% of its earnings in the form of a dividend. Five Star Bancorp pays out 29.6% 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. Sierra Bancorp has increased its dividend for 2 consecutive years. Sierra Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Five Star Bancorp beats Sierra Bancorp on 12 of the 17 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

About Five Star Bancorp

Five Star Bancorp operates as the bank holding company for Five Star Bank that provides a range of banking products and services to small and medium-sized businesses, professionals, and individuals in Northern California. It accepts various deposits, such as money market accounts, noninterest-bearing and interest checking accounts, savings accounts, term certificate accounts, and time deposits. The company also offers loan products, including commercial and residential real estate loans; commercial loans; commercial land loans; farmland loans; commercial and residential construction loans; and consumer and other loans, as well as operating lines of credit. In addition, it provides debit cards; and remote deposit capture, online and mobile banking, and direct deposit services. Five Star Bancorp was founded in 1999 and is headquartered in Rancho Cordova, California.