Head-To-Head Comparison: Provident Financial (NASDAQ:PROV) versus ServisFirst Bancshares (NYSE:SFBS)

ServisFirst Bancshares (NYSE:SFBS) and Provident Financial (NASDAQ:PROV) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, profitability, earnings, analyst recommendations, institutional ownership, dividends and valuation.

Dividends

ServisFirst Bancshares pays an annual dividend of $0.76 per share and has a dividend yield of 1.8%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. ServisFirst Bancshares pays out 25.9% of its earnings in the form of a dividend. Provident Financial pays out 54.4% 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. ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Earnings and Valuation

This table compares ServisFirst Bancshares and Provident Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$619.37 million	7.47	$276.60 million	$2.93	14.44
Provident Financial	$59.62 million	1.95	$6.66 million	$1.03	18.14

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

Insider & Institutional Ownership

67.3% of ServisFirst Bancshares shares are owned by institutional investors. Comparatively, 71.3% of Provident Financial shares are owned by institutional investors. 6.5% of ServisFirst Bancshares shares are owned by company insiders. Comparatively, 11.5% of Provident Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for ServisFirst Bancshares and Provident Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	1	3	1	3.00
Provident Financial	0	2	0	1	2.67

ServisFirst Bancshares presently has a consensus price target of $47.67, indicating a potential upside of 12.67%. Provident Financial has a consensus price target of $18.00, indicating a potential downside of 3.64%. Given ServisFirst Bancshares’ stronger consensus rating and higher probable upside, equities analysts clearly believe ServisFirst Bancshares is more favorable than Provident Financial.

Volatility and Risk

ServisFirst Bancshares has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Provident Financial has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Profitability

This table compares ServisFirst Bancshares and Provident Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	30.95%	17.42%	1.82%
Provident Financial	11.16%	5.23%	0.54%

Summary

ServisFirst Bancshares beats Provident Financial on 13 of the 17 factors compared between the two stocks.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

About Provident Financial

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The company's deposit products include checking, savings, and money market accounts, as well as time deposits; and loan portfolio consists of single-family, multi-family, commercial real estate, construction, mortgage, commercial business, and consumer loans. It also offers investment services comprising the sale of investment products, such as annuities and mutual funds; and trustee services for real estate transactions. The company operates through full-service banking offices in Riverside County and San Bernardino County. Provident Financial Holdings, Inc. was founded in 1956 and is headquartered in Riverside, California.