Banner (NASDAQ:BANR) & Lake Shore Bancorp (NASDAQ:LSBK) Critical Review

Banner (NASDAQ:BANR) and Lake Shore Bancorp (NASDAQ:LSBK) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Banner and Lake Shore Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banner	$877.77 million	2.87	$195.38 million	$5.88	11.76
Lake Shore Bancorp	$39.56 million	3.71	$7.27 million	$1.12	16.96

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

Dividends

Banner pays an annual dividend of $2.08 per share and has a dividend yield of 3.0%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Banner pays out 35.4% of its earnings in the form of a dividend. Lake Shore Bancorp pays out 32.1% 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.

Volatility and Risk

Banner has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Banner and Lake Shore Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banner	0	4	2	0	2.33
Lake Shore Bancorp	0	0	0	1	4.00

Banner presently has a consensus target price of $75.75, suggesting a potential upside of 9.56%. Given Banner’s higher possible upside, equities analysts clearly believe Banner is more favorable than Lake Shore Bancorp.

Insider & Institutional Ownership

87.3% of Banner shares are owned by institutional investors. Comparatively, 8.7% of Lake Shore Bancorp shares are owned by institutional investors. 1.4% of Banner 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 endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Banner	22.81%	10.44%	1.25%
Lake Shore Bancorp	20.62%	5.84%	1.15%

Summary

Banner beats Lake Shore Bancorp on 11 of the 17 factors compared between the two stocks.

About Banner

Banner Corporation is a bank holding company and the parent of Banner Bank, a community bank serving individuals, businesses and organizations in the western United States. The company traces its roots to the First National Bank of Walla Walla, established in Washington in 1890. Through Banner Bank, the company offers deposit accounts, business and consumer lending, residential mortgage services, and commercial banking solutions. Its services also include treasury management and wealth management.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. is the holding company for Lake Shore Savings Bank, a community bank headquartered in Dunkirk, New York. The bank provides banking and financial services to individuals, families, businesses and nonprofit organizations in western New York, with a presence in Chautauqua and Erie counties. Lake Shore Savings Bank offers deposit products such as checking, savings, money market and certificate accounts, along with consumer and commercial lending. Its lending activities include residential mortgages, home equity loans, commercial real estate loans, business loans and other consumer financing.