ConnectOne Bancorp (NASDAQ:CNOB) versus Pinnacle Financial Partners (NYSE:PNFP) Critical Analysis

ConnectOne Bancorp (NASDAQ:CNOB) and Pinnacle Financial Partners (NYSE:PNFP) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Valuation & Earnings

This table compares ConnectOne Bancorp and Pinnacle Financial Partners”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ConnectOne Bancorp	$679.93 million	2.38	$80.44 million	$2.86	11.23
Pinnacle Financial Partners	$3.32 billion	2.37	$641.86 million	$7.49	13.56

Pinnacle Financial Partners has higher revenue and earnings than ConnectOne Bancorp. ConnectOne Bancorp is trading at a lower price-to-earnings ratio than Pinnacle Financial Partners, indicating that it is currently the more affordable of the two stocks.

Dividends

ConnectOne Bancorp pays an annual dividend of $0.78 per share and has a dividend yield of 2.4%. Pinnacle Financial Partners pays an annual dividend of $2.00 per share and has a dividend yield of 2.0%. ConnectOne Bancorp pays out 27.3% of its earnings in the form of a dividend. Pinnacle Financial Partners pays out 26.7% 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. ConnectOne Bancorp has raised its dividend for 4 consecutive years and Pinnacle Financial Partners has raised its dividend for 1 consecutive years. ConnectOne Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

ConnectOne Bancorp has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Pinnacle Financial Partners has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.

Profitability

This table compares ConnectOne Bancorp and Pinnacle Financial Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ConnectOne Bancorp	18.97%	11.96%	1.25%
Pinnacle Financial Partners	15.97%	11.33%	1.25%

Insider & Institutional Ownership

67.7% of ConnectOne Bancorp shares are owned by institutional investors. Comparatively, 87.4% of Pinnacle Financial Partners shares are owned by institutional investors. 5.2% of ConnectOne Bancorp shares are owned by company insiders. Comparatively, 1.3% of Pinnacle Financial Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for ConnectOne Bancorp and Pinnacle Financial Partners, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ConnectOne Bancorp	0	0	5	0	3.00
Pinnacle Financial Partners	0	3	17	1	2.90

ConnectOne Bancorp currently has a consensus price target of $35.75, indicating a potential upside of 11.34%. Pinnacle Financial Partners has a consensus price target of $120.15, indicating a potential upside of 18.29%. Given Pinnacle Financial Partners’ higher possible upside, analysts clearly believe Pinnacle Financial Partners is more favorable than ConnectOne Bancorp.

Summary

Pinnacle Financial Partners beats ConnectOne Bancorp on 9 of the 17 factors compared between the two stocks.

About ConnectOne Bancorp

ConnectOne Bancorp, Inc. operates as the bank holding company for ConnectOne Bank that provides commercial banking products and services for small and mid-sized businesses, local professionals, and individuals in the New York Metropolitan area and South Florida market. The company offers personal and business checking, money market, and time and savings accounts; credit cards, wire transfers, safe deposit boxes, automated teller services and telephone, and internet and mobile banking. It provides retirement accounts, consumers and cash management services for business clients, including treasury direct, automated clearing house, remote deposit capture, and digital invoicing. In addition, the company offers consumer and commercial business loans, including lines of credit, commercial and residential mortgages, home equity and bridge loans, and other personal loans; commercial loans secured by collateral, such as business assets comprising accounts receivable, inventory and equipment, and mortgages filed on commercial and residential real estate, as well as cash balances and marketable securities. Further, it provides real estate loans, which includes loans secured by first liens on completed commercial properties, including multi-family properties, to purchase or refinance properties; residential mortgages, such as loans secured by first liens on 1-4 family and condominium; and cooperative residential real estate loans. The company was formerly known as Center Bancorp, Inc. and changed its name to ConnectOne Bancorp, Inc. in July 2014. ConnectOne Bancorp, Inc. was incorporated in 1982 and is headquartered in Englewood Cliffs, New Jersey.

About Pinnacle Financial Partners

Pinnacle Financial Partners, Inc. operates as the bank holding company for Pinnacle Bank that provides various banking products and services to individuals, businesses, and professional entities in the United States. It accepts various deposits, including savings, noninterest-bearing and interest-bearing checking, money market, and certificate of deposit accounts; and provides treasury management services, such as online wire origination, enhanced ACH origination, positive pay, zero balance and sweep accounts, automated bill pay services, electronic receivables processing, lockbox processing, and merchant card acceptance services, small business and commercial credit cards corporate purchasing cards, and virtual accounting/deposit escrow solutions. The company also offers equipment and working capital loan; commercial real estate loans, such as investment properties and business loan; secured and unsecured loans comprising installment and term, lines of credit, and residential first mortgage, as well as home equity loans and home equity lines of credit; and credit cards for consumers and businesses. In addition, the company provides investment products; brokerage and investment advisory programs; and fiduciary and investment services, including personal trust, investment management, estate administration, endowments, foundations, individual retirement accounts, escrow services, and custody. Further, it offers insurance agency services in the property and casualty area; investment, merger and acquisition advisory services, private debt, equity and mezzanine, and other middle-market advisory services; and other banking services, including telephone and online banking, mobile banking, debit cards, direct deposit and remote deposit capture, mobile deposit option, automated teller machine, and cash management services. Pinnacle Financial Partners, Inc. was incorporated in 2000 and is headquartered in Nashville, Tennessee.