Security Federal (OTCMKTS:SFDL) & Southern First Bancshares (NASDAQ:SFST) Critical Analysis

Security Federal (OTCMKTS:SFDL) and Southern First Bancshares (NASDAQ:SFST) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Insider and Institutional Ownership

75.0% of Southern First Bancshares shares are held by institutional investors. 36.4% of Security Federal shares are held by insiders. Comparatively, 6.9% of Southern First Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Security Federal and Southern First Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Security Federal	15.72%	12.60%	0.88%
Southern First Bancshares	15.21%	9.65%	0.79%

Earnings & Valuation

This table compares Security Federal and Southern First Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Security Federal	$90.14 million	1.34	$13.67 million	$4.00	9.75
Southern First Bancshares	$224.62 million	2.57	$30.37 million	$4.28	14.28

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Security Federal and Southern First Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Security Federal	0	0	0	0	0.00
Southern First Bancshares	0	1	2	0	2.67

Southern First Bancshares has a consensus price target of $64.00, suggesting a potential upside of 4.75%. Given Southern First Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe Southern First Bancshares is more favorable than Security Federal.

Volatility and Risk

Security Federal has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500. Comparatively, Southern First Bancshares has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Summary

Southern First Bancshares beats Security Federal on 10 of the 14 factors compared between the two stocks.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.

About Southern First Bancshares

Southern First Bancshares, Inc. operates as the bank holding company for Southern First Bank that provides commercial, consumer, and mortgage loans to the general public in South Carolina, North Carolina, and Georgia. The company accepts various deposit products that include checking accounts, commercial checking accounts, and savings accounts, as well as other time deposits, including daily money market accounts and long-term certificates of deposit. Its loan portfolio comprises commercial real estate loans; construction real estate loans; commercial business loans for various lines of businesses, such as the manufacturing, service industry, and professional service areas; consumer real estate and home equity loans; and other consumer loans, including secured and unsecured installment loans and revolving lines of credit. In addition, the company provides other bank services, such as internet banking, cash management, safe deposit boxes, direct deposit, automatic drafts, bill payment, and mobile banking services. Southern First Bancshares, Inc. was incorporated in 1999 and is headquartered in Greenville, South Carolina.