Sun Bancorp, Inc. /NJ (NASDAQ: SNBC) and Provident Financial Services (NYSE:PFS) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.

Insider and Institutional Ownership

70.3% of Sun Bancorp, Inc. /NJ shares are owned by institutional investors. Comparatively, 63.7% of Provident Financial Services shares are owned by institutional investors. 12.5% of Sun Bancorp, Inc. /NJ shares are owned by company insiders. Comparatively, 2.9% of Provident Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Sun Bancorp, Inc. /NJ and Provident Financial Services’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sun Bancorp, Inc. /NJ $83.00 million 5.96 $61.41 million $3.23 8.02
Provident Financial Services $357.71 million 5.21 $87.80 million $1.51 18.56

Provident Financial Services has higher revenue and earnings than Sun Bancorp, Inc. /NJ. Sun Bancorp, Inc. /NJ is trading at a lower price-to-earnings ratio than Provident Financial Services, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sun Bancorp, Inc. /NJ and Provident Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sun Bancorp, Inc. /NJ 72.60% 19.02% 2.77%
Provident Financial Services 25.90% 7.61% 1.02%

Analyst Recommendations

This is a summary of recent recommendations for Sun Bancorp, Inc. /NJ and Provident Financial Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Bancorp, Inc. /NJ 0 0 2 0 3.00
Provident Financial Services 0 5 1 0 2.17

Sun Bancorp, Inc. /NJ currently has a consensus price target of $29.75, indicating a potential upside of 14.86%. Provident Financial Services has a consensus price target of $27.88, indicating a potential downside of 0.55%. Given Sun Bancorp, Inc. /NJ’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Sun Bancorp, Inc. /NJ is more favorable than Provident Financial Services.

Volatility and Risk

Sun Bancorp, Inc. /NJ has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500.

Dividends

Sun Bancorp, Inc. /NJ pays an annual dividend of $0.04 per share and has a dividend yield of 0.2%. Provident Financial Services pays an annual dividend of $0.80 per share and has a dividend yield of 2.9%. Sun Bancorp, Inc. /NJ pays out 1.2% of its earnings in the form of a dividend. Provident Financial Services pays out 53.0% 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. Sun Bancorp, Inc. /NJ has increased its dividend for 7 consecutive years.

Summary

Sun Bancorp, Inc. /NJ beats Provident Financial Services on 12 of the 17 factors compared between the two stocks.

Sun Bancorp, Inc. /NJ Company Profile

Sun Bancorp, Inc. is a bank holding company. The Company’s principal subsidiary is Sun National Bank (the Bank). Through the Bank, the Company provides an array of community banking services to consumers, small businesses and mid-size companies. The Company’s lending services to businesses include term loans, lines of credit and commercial mortgages. The Company’s commercial deposit services include business checking and money market accounts, and cash management solutions, such as online banking, electronic bill payment and wire transfer services, lockbox services, remote deposit and controlled disbursement services. The Company’s lending services to consumers consist primarily of lines of credit of overdraft sweeps. The Company’s consumer deposit services include checking accounts, savings accounts, money market accounts, certificates of deposit and individual retirement accounts.

Provident Financial Services Company Profile

Provident Financial Services Inc. is a holding company for The Provident Bank (the Bank). The Bank is a New Jersey-chartered capital stock savings bank. As a community and customer-oriented institution, the Bank provides personal service and customer convenience in serving the financial needs of the individuals, families and businesses residing in its primary markets areas. The Bank attracts deposits from the general public and businesses in the areas surrounding its banking offices and uses those funds, together with funds generated from operations and borrowings, to originate commercial real estate loans, residential mortgage loans, commercial business loans and consumer loans. The Bank also invests in mortgage-backed securities and other permissible investments. It operates service branch offices in the New Jersey counties of Hudson, Bergen, Essex, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, as well as in Bucks, Lehigh and Northampton counties in Pennsylvania.

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