Porter Bancorp (NASDAQ: PBIB) and People’s United Financial (NASDAQ:PBCT) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Earnings and Valuation

This table compares Porter Bancorp and People’s United Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Porter Bancorp $35.80 million 1.95 -$2.01 million ($0.33) -34.73
People’s United Financial $1.34 billion 4.58 $300.38 million $0.89 20.45

People’s United Financial has higher revenue and earnings than Porter Bancorp. Porter Bancorp is trading at a lower price-to-earnings ratio than People’s United Financial, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Porter Bancorp has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500. Comparatively, People’s United Financial has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Insider & Institutional Ownership

17.9% of Porter Bancorp shares are held by institutional investors. Comparatively, 77.3% of People’s United Financial shares are held by institutional investors. 28.7% of Porter Bancorp shares are held by insiders. Comparatively, 2.7% of People’s United Financial 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.

Profitability

This table compares Porter Bancorp and People’s United Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Porter Bancorp -4.59% -5.33% -0.20%
People’s United Financial 18.88% 6.14% 0.75%

Dividends

People’s United Financial pays an annual dividend of $0.69 per share and has a dividend yield of 3.8%. Porter Bancorp does not pay a dividend. People’s United Financial pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. People’s United Financial has increased its dividend for 10 consecutive years.

Analyst Ratings

This is a summary of recent ratings for Porter Bancorp and People’s United Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Porter Bancorp 0 0 0 0 N/A
People’s United Financial 2 9 0 0 1.82

People’s United Financial has a consensus target price of $18.31, suggesting a potential upside of 0.58%. Given People’s United Financial’s higher possible upside, analysts clearly believe People’s United Financial is more favorable than Porter Bancorp.

Summary

People’s United Financial beats Porter Bancorp on 11 of the 14 factors compared between the two stocks.

About Porter Bancorp

Porter Bancorp, Inc. is a bank holding company. The Company operates through its subsidiary, PBI Bank (the Bank). The Bank is a community bank with a range of commercial and personal banking products. It offers retail and commercial deposit products. It offers drive-in banking facilities, automatic teller machines, night depository, personalized checks, credit cards, debit cards, Internet banking, mobile banking, treasury management services, remote deposit services, electronic funds transfers through automated clearing house services, domestic and foreign wire transfers, cash management, vault services, and loan and deposit sweep accounts. It operates banking offices in approximately 12 counties in Kentucky. Its markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt. It serves south central Kentucky and southern Kentucky from banking offices in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess Counties.

About People’s United Financial

People’s United Financial, Inc. is a bank holding company and a financial holding company of People’s United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

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