Analyzing Pinnacle Financial Partners (NASDAQ:PNFP) and First Community Bancshares (NASDAQ:FCBC)

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

Earnings and Valuation

This table compares Pinnacle Financial Partners and First Community Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Financial Partners	$1.74 billion	3.80	$475.06 million	$8.09	10.52
First Community Bancshares	$185.42 million	4.06	$48.79 million	$2.66	14.82

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pinnacle Financial Partners	19.17%	9.91%	1.17%
First Community Bancshares	26.32%	10.17%	1.59%

Insider and Institutional Ownership

87.4% of Pinnacle Financial Partners shares are held by institutional investors. Comparatively, 35.0% of First Community Bancshares shares are held by institutional investors. 1.5% of Pinnacle Financial Partners shares are held by company insiders. Comparatively, 3.7% of First Community Bancshares shares are held by company 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

Pinnacle Financial Partners pays an annual dividend of $2.00 per share and has a dividend yield of 2.3%. First Community Bancshares pays an annual dividend of $1.24 per share and has a dividend yield of 3.1%. Pinnacle Financial Partners pays out 24.7% of its earnings in the form of a dividend. First Community Bancshares pays out 46.6% 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. Pinnacle Financial Partners has increased its dividend for 1 consecutive years and First Community Bancshares has increased its dividend for 13 consecutive years. First Community Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings for Pinnacle Financial Partners and First Community Bancshares, as provided by MarketBeat.

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

Pinnacle Financial Partners currently has a consensus price target of $113.41, suggesting a potential upside of 33.24%. Given Pinnacle Financial Partners’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Pinnacle Financial Partners is more favorable than First Community Bancshares.

Volatility and Risk

Pinnacle Financial Partners has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, First Community Bancshares has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Summary

Pinnacle Financial Partners beats First Community Bancshares on 10 of the 18 factors compared between the two stocks.

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.

About First Community Bancshares

First Community Bankshares, Inc. operates as the financial holding company for First Community Bank that provides various banking products and services. It offers demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement plans; and commercial, consumer real estate, and consumer and other loans. The company also provides trust management, estate administration, and investment advisory services; and investment management services. It serves individuals and businesses across various industries, such as education, government, and health services; coal mining and gas extraction; retail trade; construction; manufacturing; tourism; and transportation. The company operates through branches in West Virginia, Virginia, North Carolina, and Tennessee. Community Bankshares, Inc. was founded in 1874 and is headquartered in Bluefield, Virginia.