1st Constitution Bancorp (NASDAQ: FCCY) and Provident Financial Services (NYSE:PFS) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.

Dividends

1st Constitution Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.3%. Provident Financial Services pays an annual dividend of $0.80 per share and has a dividend yield of 3.0%. 1st Constitution Bancorp pays out 23.8% of its earnings in the form of a dividend. Provident Financial Services pays out 53.0% 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. Provident Financial Services has raised its dividend for 7 consecutive years. Provident Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares 1st Constitution Bancorp and Provident Financial Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
1st Constitution Bancorp $47.75 million 3.08 $9.28 million $1.01 18.07
Provident Financial Services $357.71 million 4.98 $87.80 million $1.51 17.76

Provident Financial Services has higher revenue and earnings than 1st Constitution Bancorp. Provident Financial Services is trading at a lower price-to-earnings ratio than 1st Constitution Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares 1st Constitution Bancorp and Provident Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
1st Constitution Bancorp 16.78% 7.79% 0.80%
Provident Financial Services 25.90% 7.61% 1.02%

Volatility and Risk

1st Constitution Bancorp has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.

Institutional & Insider Ownership

27.9% of 1st Constitution Bancorp shares are held by institutional investors. Comparatively, 63.7% of Provident Financial Services shares are held by institutional investors. 14.5% of 1st Constitution Bancorp shares are held by company insiders. Comparatively, 2.9% of Provident Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for 1st Constitution Bancorp and Provident Financial Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
1st Constitution Bancorp 0 1 0 0 2.00
Provident Financial Services 0 5 1 0 2.17

1st Constitution Bancorp currently has a consensus price target of $18.00, indicating a potential downside of 1.37%. Provident Financial Services has a consensus price target of $27.88, indicating a potential upside of 3.93%. Given Provident Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Provident Financial Services is more favorable than 1st Constitution Bancorp.

Summary

Provident Financial Services beats 1st Constitution Bancorp on 13 of the 17 factors compared between the two stocks.

About 1st Constitution Bancorp

1st Constitution Bancorp is the bank holding company for 1st Constitution Bank (the Bank). The Bank is a commercial bank, which is engaged in the business of commercial and retail banking. The Company operates through the Community Banking segment. The Community Banking segment consists of construction, commercial, retail and mortgage banking operations. As a community bank, the Bank offers a range of services (including demand, savings and time deposits and commercial and consumer/installment loans) to individuals, small businesses and not-for-profit organizations principally in the Fort Lee area of Bergen County and in Middlesex, Mercer, Somerset and Monmouth Counties of New Jersey. The Bank’s Mortgage Warehouse Funding Group offers revolving lines of credit that are available to licensed mortgage banking companies (the Warehouse Line of Credit). The Bank’s investment activities are classified as available for sale and held to maturity securities.

About Provident Financial Services

Provident Financial Services Inc. is a holding company for The Provident Bank (the Bank). The Bank is a New Jersey-chartered capital stock savings bank. As a community and customer-oriented institution, the Bank provides personal service and customer convenience in serving the financial needs of the individuals, families and businesses residing in its primary markets areas. The Bank attracts deposits from the general public and businesses in the areas surrounding its banking offices and uses those funds, together with funds generated from operations and borrowings, to originate commercial real estate loans, residential mortgage loans, commercial business loans and consumer loans. The Bank also invests in mortgage-backed securities and other permissible investments. It operates service branch offices in the New Jersey counties of Hudson, Bergen, Essex, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, as well as in Bucks, Lehigh and Northampton counties in Pennsylvania.

Receive News & Ratings for 1st Constitution Bancorp Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for 1st Constitution Bancorp and related companies with MarketBeat.com's FREE daily email newsletter.