Prosperity Bancshares (NYSE:PB) and Lakeland Bancorp (NASDAQ:LBAI) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares Prosperity Bancshares and Lakeland Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prosperity Bancshares 35.75% 7.59% 1.30%
Lakeland Bancorp 26.02% 9.99% 1.07%

Earnings and Valuation

This table compares Prosperity Bancshares and Lakeland Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Prosperity Bancshares $793.99 million 6.31 $272.16 million $3.94 18.22
Lakeland Bancorp $215.64 million 4.01 $52.58 million $1.11 16.40

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Prosperity Bancshares and Lakeland Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prosperity Bancshares 0 7 2 0 2.22
Lakeland Bancorp 0 1 2 0 2.67

Prosperity Bancshares currently has a consensus price target of $74.56, suggesting a potential upside of 3.87%. Lakeland Bancorp has a consensus price target of $20.75, suggesting a potential upside of 14.01%. Given Lakeland Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Lakeland Bancorp is more favorable than Prosperity Bancshares.

Institutional and Insider Ownership

77.5% of Prosperity Bancshares shares are owned by institutional investors. Comparatively, 54.5% of Lakeland Bancorp shares are owned by institutional investors. 5.1% of Prosperity Bancshares shares are owned by company insiders. Comparatively, 6.1% of Lakeland Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Prosperity Bancshares has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Lakeland Bancorp has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Dividends

Prosperity Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 2.0%. Lakeland Bancorp pays an annual dividend of $0.46 per share and has a dividend yield of 2.5%. Prosperity Bancshares pays out 36.5% of its earnings in the form of a dividend. Lakeland Bancorp pays out 41.4% 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. Prosperity Bancshares has raised its dividend for 14 consecutive years and Lakeland Bancorp has raised its dividend for 8 consecutive years.

Summary

Prosperity Bancshares beats Lakeland Bancorp on 11 of the 16 factors compared between the two stocks.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides retail and commercial banking services to small and medium-sized businesses, and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts. The company also offers 1-4 family residential mortgage, commercial mortgage and multifamily residential, commercial and industrial, agricultural real estate, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; and consumer durables and home equity loans. In addition, it provides Internet banking and other cash management, mobile banking, trust and wealth management, retail brokerage, mortgage banking, and automated telephone banking services, as well as debit and credit cards. As of December 31, 2017, the company operated 242 full service banking locations comprising 65 in the Houston area, including The Woodlands; 29 in the South Texas area consisting of Corpus Christi and Victoria; 33 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area comprising Austin and San Antonio; 34 in the West Texas area, including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area. Prosperity Bancshares, Inc. was founded in 1983 and is based in Houston, Texas.

About Lakeland Bancorp

Lakeland Bancorp, Inc. operates as the bank holding company for Lakeland Bank that provides financial products and services for individuals and small to medium sized businesses. It offers commercial banking services, including savings, money market, and time accounts, as well as demand deposits; lending solutions, such as short and medium term loans, lines of credit, letters of credit, inventory and accounts receivable financing, real estate construction loans, mortgage loans, small business administration loans, commercial real estate loans, commercial and industrial loans, and equipment financing, as well as merchant credit card services; and Internet banking, mobile banking, wire transfer, night depository, and cash management services. The company also provides consumer banking services, including checking accounts, savings accounts, NOW accounts, money market accounts, certificates of deposit, secured and unsecured loans, consumer installment loans, mortgage loans, and safe deposit services, as well as Internet banking services. In addition, it offers investment and advisory services; and non-deposit products, which include securities brokerage services, including mutual funds and variable annuities. As of January 26, 2018, the company operated 53 branch offices throughout Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, and Union counties in New Jersey; 6 New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Newton, Teaneck, and Waldwick; 1 commercial lending center in New York to serve the Hudson Valley region; and 1 commercial loan production office serving Middlesex and Monmouth counties in New Jersey. Lakeland Bancorp, Inc. was founded in 1989 and is headquartered in Oak Ridge, New Jersey.

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