Analyzing Provident Financial (NASDAQ:PROV) and First Mid Bancshares (NASDAQ:FMBH)

First Mid Bancshares (NASDAQ:FMBH) and Provident Financial (NASDAQ:PROV) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, institutional ownership, valuation and risk.

Volatility & Risk

First Mid Bancshares has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Provident Financial has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Valuation & Earnings

This table compares First Mid Bancshares and Provident Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Mid Bancshares	$466.04 million	2.90	$91.75 million	$4.03	12.62
Provident Financial	$59.62 million	1.95	$6.66 million	$1.03	18.11

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

Dividends

First Mid Bancshares pays an annual dividend of $1.04 per share and has a dividend yield of 2.0%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. First Mid Bancshares pays out 25.8% of its earnings in the form of a dividend. Provident Financial pays out 54.4% 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 Mid Bancshares has increased its dividend for 3 consecutive years.

Profitability

This table compares First Mid Bancshares and Provident Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Mid Bancshares	19.76%	10.86%	1.29%
Provident Financial	11.16%	5.23%	0.54%

Institutional and Insider Ownership

47.6% of First Mid Bancshares shares are owned by institutional investors. Comparatively, 71.3% of Provident Financial shares are owned by institutional investors. 6.0% of First Mid Bancshares shares are owned by company insiders. Comparatively, 11.5% of Provident Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for First Mid Bancshares and Provident Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Mid Bancshares	0	3	3	0	2.50
Provident Financial	0	2	0	1	2.67

First Mid Bancshares presently has a consensus target price of $54.62, indicating a potential upside of 7.38%. Provident Financial has a consensus target price of $18.00, indicating a potential downside of 3.49%. Given First Mid Bancshares’ higher probable upside, equities research analysts plainly believe First Mid Bancshares is more favorable than Provident Financial.

Summary

First Mid Bancshares beats Provident Financial on 12 of the 18 factors compared between the two stocks.

About First Mid Bancshares

First Mid Bancshares, Inc., a financial holding company, provides community banking products and services to commercial, retail, and agricultural customers in the United States. It accepts various deposit products, such as demand deposits, savings accounts, money market deposits, and time deposits. The company’s loan products include commercial real estate, commercial and industrial, agricultural and agricultural real estate, residential real estate, and consumer loans, as well as construction and land development, 1-4 family residential properties, and multifamily residential properties loans; and other loans comprising loans to municipalities to support community projects, such as infrastructure improvements or equipment purchases. It also offers wealth management services, which include estate planning, investment, and farm management and brokerage services for individuals; employee benefit services for businesses; and farm management and brokerage services. In addition, the company provides property and casualty, senior insurance products, and group medical insurance for businesses; and personal lines insurance to individuals. The company was formerly known as First Mid-Illinois Bancshares, Inc. and changed its name to First Mid Bancshares, Inc. in April 2019. First Mid Bancshares, Inc. was founded in 1865 and is headquartered in Mattoon, Illinois.

About Provident Financial

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The company's deposit products include checking, savings, and money market accounts, as well as time deposits; and loan portfolio consists of single-family, multi-family, commercial real estate, construction, mortgage, commercial business, and consumer loans. It also offers investment services comprising the sale of investment products, such as annuities and mutual funds; and trustee services for real estate transactions. The company operates through full-service banking offices in Riverside County and San Bernardino County. Provident Financial Holdings, Inc. was founded in 1956 and is headquartered in Riverside, California.