Popular (NASDAQ:BPOP – Get Free Report) and Security Federal (OTCMKTS:SFDL – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.
Volatility and Risk
Popular has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500. Comparatively, Security Federal has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500.
Valuation and Earnings
This table compares Popular and Security Federal”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Popular | $4.44 billion | 2.42 | $833.16 million | $13.54 | 12.28 |
| Security Federal | $90.14 million | 1.34 | $13.67 million | $4.00 | 9.79 |
Popular has higher revenue and earnings than Security Federal. Security Federal is trading at a lower price-to-earnings ratio than Popular, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Popular and Security Federal’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Popular | 20.10% | 14.53% | 1.18% |
| Security Federal | 15.72% | 12.60% | 0.88% |
Institutional & Insider Ownership
87.3% of Popular shares are held by institutional investors. 2.1% of Popular shares are held by insiders. Comparatively, 36.4% of Security Federal shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Dividends
Popular pays an annual dividend of $3.00 per share and has a dividend yield of 1.8%. Security Federal pays an annual dividend of $0.64 per share and has a dividend yield of 1.6%. Popular pays out 22.2% of its earnings in the form of a dividend. Security Federal pays out 16.0% 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. Popular has increased its dividend for 6 consecutive years. Popular is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a summary of current ratings and price targets for Popular and Security Federal, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Popular | 0 | 1 | 10 | 1 | 3.00 |
| Security Federal | 0 | 0 | 0 | 0 | 0.00 |
Popular presently has a consensus price target of $173.18, indicating a potential upside of 4.16%. Given Popular’s stronger consensus rating and higher possible upside, research analysts clearly believe Popular is more favorable than Security Federal.
Summary
Popular beats Security Federal on 16 of the 18 factors compared between the two stocks.
About Popular
Popular, Inc., through its subsidiaries, provides various retail, mortgage, and commercial banking products and services in Puerto Rico, the United States, and the British Virgin Islands. The company provides savings, NOW, money market, and other interest-bearing demand accounts; non-interest bearing demand deposits; and certificates of deposit. It also offers commercial and industrial, commercial multi-family, commercial real estate, and residential mortgage loans; consumer loans, including personal loans, credit cards, automobile loans, home equity lines of credit, and other loans to individual borrowers; construction loans; and lease financing comprising automobile loans/leases. In addition, the company provides investment banking, auto and equipment leasing and financing, broker-dealer, and insurance services; debit cards; and online banking services. Popular, Inc. was founded in 1893 and is headquartered in Hato Rey, Puerto Rico.
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.
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