First Community Bancshares (NASDAQ: FCBC) and Financial Institutions (NASDAQ:FISI) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.

Insider & Institutional Ownership

40.3% of First Community Bancshares shares are held by institutional investors. Comparatively, 67.1% of Financial Institutions shares are held by institutional investors. 3.3% of First Community Bancshares shares are held by company insiders. Comparatively, 5.5% of Financial Institutions shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

First Community Bancshares has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Financial Institutions has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Profitability

This table compares First Community Bancshares and Financial Institutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Community Bancshares 21.56% 7.38% 1.05%
Financial Institutions 20.08% 10.03% 0.83%

Dividends

First Community Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.5%. Financial Institutions pays an annual dividend of $0.84 per share and has a dividend yield of 2.9%. First Community Bancshares pays out 48.3% of its earnings in the form of a dividend. Financial Institutions pays out 41.0% 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. Financial Institutions is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for First Community Bancshares and Financial Institutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Community Bancshares 0 2 0 0 2.00
Financial Institutions 0 2 1 0 2.33

First Community Bancshares currently has a consensus price target of $23.50, suggesting a potential downside of 19.27%. Financial Institutions has a consensus price target of $32.25, suggesting a potential upside of 11.98%. Given Financial Institutions’ stronger consensus rating and higher probable upside, analysts clearly believe Financial Institutions is more favorable than First Community Bancshares.

Earnings and Valuation

This table compares First Community Bancshares and Financial Institutions’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Community Bancshares $107.58 million 4.60 $25.36 million $1.49 19.54
Financial Institutions $127.68 million 3.38 $30.75 million $2.05 14.05

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

Summary

Financial Institutions beats First Community Bancshares on 12 of the 16 factors compared between the two stocks.

First Community Bancshares Company Profile

First Community Bancshares, Inc. is a financial holding company. The Company provides commercial banking products and services through its subsidiary First Community Bank (the Bank). The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. It provides insurance services through its subsidiary First Community Insurance Services, and offers wealth management and investment advice through its Trust Division and subsidiary First Community Wealth Management. Its products include demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement arrangements; commercial, consumer, and real estate mortgage loans and lines of credit; various credit card, debit card, and automated teller machine card services; corporate and personal trust services; investment management services, and life, health, and property and casualty insurance products.

Financial Institutions Company Profile

Financial Institutions, Inc. is a financial holding company. The Company conducts its business through its subsidiaries: Five Star Bank (the Bank), a New York chartered bank; Scott Danahy Naylon, LLC (SDN), a full service insurance agency, and Courier Capital, LLC (Courier Capital), an investment advisory and wealth management company. The Company operates through two segments: Banking and Non-Banking. The Banking segment includes all of the Company’s retail and commercial banking operations. The Non-Banking segment includes the activities of SDN and Courier Capital. The Company offers a range of banking and related financial services to consumer, commercial and municipal customers through its bank and nonbank subsidiaries. The Company’s indirect lending network includes relationships with franchised automobile dealers in Western and Central New York, the Capital District of New York and Northern and Central Pennsylvania.

Receive News & Ratings for First Community Bancshares Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for First Community Bancshares Inc. and related companies with Analyst Ratings Network's FREE daily email newsletter.