Flagstar Bancorp (NYSE: FBC) and Clifton Bancorp (NASDAQ:CSBK) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, institutional ownership, dividends, valuation and risk.

Profitability

This table compares Flagstar Bancorp and Clifton Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Flagstar Bancorp 17.51% 10.74% 1.00%
Clifton Bancorp 10.93% 1.53% 0.34%

Volatility & Risk

Flagstar Bancorp has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Clifton Bancorp has a beta of 0.4, meaning that its stock price is 60% less volatile than the S&P 500.

Insider and Institutional Ownership

96.4% of Flagstar Bancorp shares are held by institutional investors. Comparatively, 62.7% of Clifton Bancorp shares are held by institutional investors. 63.4% of Flagstar Bancorp shares are held by insiders. Comparatively, 5.6% of Clifton Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Flagstar Bancorp and Clifton Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Flagstar Bancorp $777.00 million 2.29 $146.64 million $2.57 12.11
Clifton Bancorp $28.59 million 12.71 $4.74 million $0.22 76.64

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Flagstar Bancorp and Clifton Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flagstar Bancorp 0 3 4 0 2.57
Clifton Bancorp 0 1 0 0 2.00

Flagstar Bancorp currently has a consensus price target of $30.20, indicating a potential downside of 2.96%. Clifton Bancorp has a consensus price target of $17.00, indicating a potential upside of 0.83%. Given Clifton Bancorp’s higher possible upside, analysts clearly believe Clifton Bancorp is more favorable than Flagstar Bancorp.

Dividends

Clifton Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Flagstar Bancorp does not pay a dividend. Clifton Bancorp pays out 109.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Flagstar Bancorp beats Clifton Bancorp on 12 of the 16 factors compared between the two stocks.

About Flagstar Bancorp

Flagstar Bancorp, Inc. is a savings and loan holding company. The Company’s business is primarily conducted through its principal subsidiary, Flagstar Bank, FSB. It operates through four segments: Community Banking, Mortgage Originations, Mortgage Servicing, and Other. Through Mortgage Originations segment, it originates, acquires and sells one- to four-family residential mortgage loans. The Mortgage Servicing segment includes services and subservices mortgage loans, on a fee basis, for others. The Community Banking segment originates loans, provides deposits and fee based services to consumer, business and mortgage lending customers through its Branch Banking, Business and Commercial Banking, Government Banking, Warehouse Lending and Held-for-Investment Portfolio groups. It offers checking accounts, savings accounts, money market accounts, certificates of deposit and others. Other financial services include lines of credit, revolving credit, inventory and accounts receivable.

About Clifton Bancorp

Clifton Bancorp Inc, formerly Clifton Savings Bancorp, Inc., is a savings and loan holding company that operates through its subsidiary, Clifton Savings Bank (Clifton Savings). Clifton Savings is a federally chartered savings bank. Clifton Savings operate as a community-oriented financial institution offering traditional financial services to consumers and businesses in the market area. It attracts deposits from the general public and uses those funds to originate one- to four-family, multi-family and commercial real estate, and consumer loans, which it holds for investment. Clifton Savings has one wholly owned subsidiary, Botany Inc., an investment company. In addition to the main office located in Passaic County, Clifton Savings operates 11 branch offices in Bergen and Passaic Counties, which, along with Essex, Morris, Hudson and Union Counties are its primary market area.

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