Critical Contrast: Provident Financial Services (NYSE:PFS) versus Banner (NASDAQ:BANR)

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

Insider and Institutional Ownership

87.3% of Banner shares are owned by institutional investors. Comparatively, 72.0% of Provident Financial Services shares are owned by institutional investors. 1.6% of Banner shares are owned by insiders. Comparatively, 3.1% of Provident Financial Services shares are owned by 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.

Volatility & Risk

Banner has a beta of 0.9, suggesting that its stock price is 10% 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

Banner pays an annual dividend of $2.00 per share and has a dividend yield of 3.1%. Provident Financial Services pays an annual dividend of $0.96 per share and has a dividend yield of 4.2%. Banner pays out 35.5% of its earnings in the form of a dividend. Provident Financial Services pays out 43.0% 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.

Analyst Recommendations

This is a breakdown of current ratings for Banner and Provident Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banner	0	4	3	0	2.43
Provident Financial Services	0	3	2	1	2.67

Banner currently has a consensus target price of $71.17, indicating a potential upside of 10.85%. Provident Financial Services has a consensus target price of $23.70, indicating a potential upside of 3.16%. Given Banner’s higher possible upside, equities analysts clearly believe Banner is more favorable than Provident Financial Services.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banner	$877.77 million	2.49	$195.38 million	$5.64	11.38
Provident Financial Services	$1.38 billion	2.17	$291.16 million	$2.23	10.30

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Banner	22.26%	10.46%	1.21%
Provident Financial Services	21.06%	10.69%	1.19%

Summary

Banner beats Provident Financial Services on 10 of the 17 factors compared between the two stocks.

About Banner

Banner Corporation operates as the bank holding company for Banner Bank that engages in the provision of commercial banking and financial products and services to individuals, businesses, and public sector entities in the United States. It accepts various deposit instruments, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, regular savings accounts, and certificates of deposit, as well as treasury management services and retirement savings plans. The company also provides commercial real estate loans, including owner-occupied, investment properties, and multifamily residential real estate loans; construction, land, and land development loans; one- to four-family residential real estate lending; commercial business loans; agricultural loans; consumer and other loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts; and small business administration loans. In addition, it provides electronic and digital banking services comprising debit cards and ATMs, internet banking, remote deposit, and mobile banking services. The company was founded in 1890 and is based in Walla Walla, Washington.

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.