Analyzing ServisFirst Bancshares (NYSE:SFBS) and Provident Financial Services (NYSE:PFS)

ServisFirst Bancshares (NYSE:SFBS) and Provident Financial Services (NYSE:PFS) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for ServisFirst Bancshares and Provident Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	2	0	0	2.00
Provident Financial Services	0	0	4	0	3.00

ServisFirst Bancshares currently has a consensus price target of $87.50, indicating a potential upside of 16.78%. Provident Financial Services has a consensus price target of $24.25, indicating a potential upside of 47.42%. Given Provident Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe Provident Financial Services is more favorable than ServisFirst Bancshares.

Volatility and Risk

ServisFirst Bancshares has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Dividends

ServisFirst Bancshares pays an annual dividend of $1.34 per share and has a dividend yield of 1.8%. Provident Financial Services pays an annual dividend of $0.96 per share and has a dividend yield of 5.8%. ServisFirst Bancshares pays out 30.5% of its earnings in the form of a dividend. Provident Financial Services pays out 86.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Insider and Institutional Ownership

67.3% of ServisFirst Bancshares shares are held by institutional investors. Comparatively, 72.0% of Provident Financial Services shares are held by institutional investors. 6.7% of ServisFirst Bancshares shares are held by company insiders. Comparatively, 3.1% of Provident Financial Services shares are held 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.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$498.08 million	8.22	$227.24 million	$4.40	17.03
Provident Financial Services	$1.14 billion	1.88	$115.53 million	$1.11	14.82

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

Profitability

This table compares ServisFirst Bancshares and Provident Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	24.16%	15.11%	1.40%
Provident Financial Services	11.45%	6.38%	0.69%

Summary

ServisFirst Bancshares beats Provident Financial Services on 10 of the 17 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 Provident Financial Services

Provident Financial Services, Inc. operates as the bank holding company for Provident Bank that provides various banking products and services to individuals, families, and businesses in the United States. Its deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA products. The company's loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, retail and industrial properties, and office buildings; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, personal loans and unsecured lines of credit, and auto and recreational vehicle loans. It also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, the company provides wealth management services comprising investment management, trust and estate administration, financial planning, and tax compliance and planning. Further, it sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure. The company was founded in 1839 and is headquartered in Jersey City, New Jersey.