Comparing First National (NASDAQ:FXNC) and Pinnacle Financial Partners (NASDAQ:PNFP)

First National (NASDAQ:FXNC) and Pinnacle Financial Partners (NASDAQ:PNFP) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Insider and Institutional Ownership

33.9% of First National shares are held by institutional investors. Comparatively, 87.4% of Pinnacle Financial Partners shares are held by institutional investors. 14.3% of First National shares are held by insiders. Comparatively, 1.5% of Pinnacle Financial Partners shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

First National pays an annual dividend of $0.68 per share and has a dividend yield of 2.5%. Pinnacle Financial Partners pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. First National pays out 34.5% of its earnings in the form of a dividend. Pinnacle Financial Partners pays out 24.7% 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 National has raised its dividend for 10 consecutive years and Pinnacle Financial Partners has raised its dividend for 1 consecutive years. First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares First National and Pinnacle Financial Partners”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First National	$116.51 million	2.09	$17.70 million	$1.97	13.72
Pinnacle Financial Partners	$1.74 billion	4.27	$475.06 million	$8.09	11.82

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

Volatility & Risk

First National has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Pinnacle Financial Partners has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for First National and Pinnacle Financial Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First National	0	1	0	0	2.00
Pinnacle Financial Partners	0	8	10	1	2.63

Pinnacle Financial Partners has a consensus price target of $113.41, indicating a potential upside of 18.61%. Given Pinnacle Financial Partners’ stronger consensus rating and higher probable upside, analysts clearly believe Pinnacle Financial Partners is more favorable than First National.

Profitability

This table compares First National and Pinnacle Financial Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First National	15.19%	11.01%	0.94%
Pinnacle Financial Partners	19.17%	9.91%	1.17%

Summary

Pinnacle Financial Partners beats First National on 13 of the 18 factors compared between the two stocks.

About First National

First National Corporation operates as the bank holding company for First Bank that provides various commercial banking services to small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations in Virginia. The company's deposit products include checking, savings, money market, and individual retirement accounts, as well as certificates of deposit and treasury management solutions. Its loan products comprise construction loans, including residential, land acquisition, and development loans; 1-4 family residential real estate loans; and commercial real estate loans that are secured by commercial real estate, including multi-family residential buildings, office and retail buildings, hotels, industrial buildings, and religious facilities. In addition, the company's loan products include commercial and industrial loans that are secured by business assets, such as accounts receivable, equipment, and inventory; home equity loans; and secured and unsecured consumer loans, such as lines of credit, automobile loans, deposit account loans, and installment and demand loans. Further, it provides wealth management services, including estate planning, investment management of assets, trustee under an agreement, trustee under a will, and estate settlement. Additionally, the company offers title insurance and investment services; and holds other real estate owned and office sites, as well as provides internet and mobile banking, remote deposit capture, and other traditional banking services. First National Corporation was founded in 1907 and is headquartered in Strasburg, Virginia.

About Pinnacle Financial Partners

Pinnacle Financial Partners, Inc., together with its subsidiaries, operates as the bank holding company for Pinnacle Bank that provides various banking products and services to individuals, businesses, and professional entities in the United States. The company accepts various deposits, including savings, noninterest-bearing and interest-bearing checking, money market, and certificate of deposit accounts; and provides treasury management services, which includes online wire origination, enhanced ACH origination services, positive pay, zero balance and sweep accounts, automated bill pay services, electronic receivables processing, lockbox processing, and merchant card acceptance services. It offers equipment and working capital loans; commercial real estate loans comprising investment properties and business loans; secured and unsecured loans, such as installment and term, lines of credit, and residential first mortgage, as well as home equity loans and home equity lines of credit; and credit cards for consumers and businesses. The company also provides investment products; brokerage and investment advisory programs; and fiduciary and investment services, such as personal trust, investment management, estate administration, endowments, foundations, individual retirement accounts, escrow services, and custody. In addition, it offers insurance agency services primarily in the property and casualty area; merger and acquisition advisory services; and private debt, equity and mezzanine, and other middle-market advisory services. Further, the company provides telephone and online banking, mobile banking, debit and credit cards, direct deposit and remote deposit capture, mobile deposit option, automated teller machine, and cash management services. Pinnacle Financial Partners, Inc. was incorporated in 2000 and is headquartered in Nashville, Tennessee.