Lake Shore Bancorp (NASDAQ:LSBK) vs. ServisFirst Bancshares (NYSE:SFBS) Critical Comparison

ServisFirst Bancshares (NYSE:SFBS) and Lake Shore Bancorp (NASDAQ:LSBK) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.

Insider and Institutional Ownership

67.3% of ServisFirst Bancshares shares are owned by institutional investors. Comparatively, 8.8% of Lake Shore Bancorp shares are owned by institutional investors. 6.5% of ServisFirst Bancshares shares are owned by company insiders. Comparatively, 8.4% of Lake Shore Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

ServisFirst Bancshares pays an annual dividend of $1.52 per share and has a dividend yield of 1.9%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.3%. ServisFirst Bancshares pays out 28.0% of its earnings in the form of a dividend. Lake Shore Bancorp pays out 30.5% 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. ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Volatility and Risk

ServisFirst Bancshares has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Profitability

This table compares ServisFirst Bancshares and Lake Shore Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	28.80%	16.95%	1.74%
Lake Shore Bancorp	20.23%	6.53%	1.11%

Earnings & Valuation

This table compares ServisFirst Bancshares and Lake Shore Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$1.02 billion	4.27	$276.60 million	$5.42	14.66
Lake Shore Bancorp	$39.56 million	3.15	$7.27 million	$1.18	13.44

ServisFirst Bancshares has higher revenue and earnings than Lake Shore Bancorp. Lake Shore Bancorp is trading at a lower price-to-earnings ratio than ServisFirst Bancshares, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations for ServisFirst Bancshares and Lake Shore Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	2	2	1	2.80
Lake Shore Bancorp	0	1	0	0	2.00

ServisFirst Bancshares currently has a consensus price target of $94.33, indicating a potential upside of 18.73%. Given ServisFirst Bancshares’ stronger consensus rating and higher probable upside, equities research analysts plainly believe ServisFirst Bancshares is more favorable than Lake Shore Bancorp.

Summary

ServisFirst Bancshares beats Lake Shore Bancorp on 16 of the 18 factors compared between the two stocks.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.