Contrasting United Community Banks (NYSE:UCB) and Provident Financial (NASDAQ:PROV)

Provident Financial (NASDAQ:PROV) and United Community Banks (NYSE:UCB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Risk and Volatility

Provident Financial has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, United Community Banks has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Dividends

Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. United Community Banks pays an annual dividend of $1.04 per share and has a dividend yield of 2.9%. Provident Financial pays out 54.4% of its earnings in the form of a dividend. United Community Banks pays out 34.2% 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.

Profitability

This table compares Provident Financial and United Community Banks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Provident Financial	11.16%	5.23%	0.54%
United Community Banks	24.43%	9.61%	1.24%

Valuation & Earnings

This table compares Provident Financial and United Community Banks”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Provident Financial	$59.62 million	1.95	$6.66 million	$1.03	18.09
United Community Banks	$1.09 billion	3.92	$328.10 million	$3.04	11.61

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

Institutional & Insider Ownership

71.3% of Provident Financial shares are held by institutional investors. Comparatively, 82.3% of United Community Banks shares are held by institutional investors. 11.5% of Provident Financial shares are held by company insiders. Comparatively, 0.4% of United Community Banks 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Provident Financial and United Community Banks, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Provident Financial	0	2	0	1	2.67
United Community Banks	0	3	4	1	2.75

Provident Financial currently has a consensus price target of $18.00, suggesting a potential downside of 3.38%. United Community Banks has a consensus price target of $39.40, suggesting a potential upside of 11.60%. Given United Community Banks’ stronger consensus rating and higher possible upside, analysts plainly believe United Community Banks is more favorable than Provident Financial.

Summary

United Community Banks beats Provident Financial on 13 of the 16 factors compared between the two stocks.

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.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.