Critical Survey: Sterling Bancorp (STL) & First Bancshares (FBMS)

Sterling Bancorp (NYSE: STL) and First Bancshares (NASDAQ:FBMS) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Risk & Volatility

Sterling Bancorp has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500. Comparatively, First Bancshares has a beta of -0.32, meaning that its share price is 132% less volatile than the S&P 500.

Profitability

This table compares Sterling Bancorp and First Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sterling Bancorp 20.19% 9.67% 1.28%
First Bancshares 17.38% 10.62% 1.17%

Valuation and Earnings

This table compares Sterling Bancorp and First Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sterling Bancorp $746.65 million 6.67 $93.03 million $1.40 15.79
First Bancshares $80.43 million 6.04 $10.61 million $1.76 22.39

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Sterling Bancorp and First Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sterling Bancorp 0 2 4 0 2.67
First Bancshares 0 0 2 0 3.00

Sterling Bancorp currently has a consensus target price of $30.31, suggesting a potential upside of 37.14%. First Bancshares has a consensus target price of $38.00, suggesting a potential downside of 3.55%. Given Sterling Bancorp’s higher probable upside, research analysts clearly believe Sterling Bancorp is more favorable than First Bancshares.

Insider & Institutional Ownership

91.6% of Sterling Bancorp shares are held by institutional investors. Comparatively, 62.6% of First Bancshares shares are held by institutional investors. 2.1% of Sterling Bancorp shares are held by company insiders. Comparatively, 11.8% of First Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Sterling Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. First Bancshares pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. Sterling Bancorp pays out 20.0% of its earnings in the form of a dividend. First Bancshares pays out 11.4% 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.

Summary

Sterling Bancorp beats First Bancshares on 10 of the 16 factors compared between the two stocks.

Sterling Bancorp Company Profile

Sterling Bancorp operates as the bank holding company for Sterling National Bank that provides various banking services to commercial, consumer, and municipal clients in the United States. The company accepts deposit products, including checking, money market, savings, time, and interest and non-interest bearing demand deposits, as well as certificates of deposit and mortgage escrow funds. It originates various loans that comprise residential and commercial mortgage loans; commercial and industrial, asset-based, payroll finance, warehouse, factored receivables, equipment finance, public sector, and commercial real estate and multi-family loans; consumer loans, such as homeowner loans, home equity lines of credit, new and used automobile loans, and personal unsecured loans; and acquisition, development, and construction loans. In addition, the company engages in the third-party provider to sell mutual funds and annuities; and provision of annuity and wealth management products. As of December 31, 2017, it operated 128 full-service retail and commercial financial centers, which comprise 29 offices located in Nassau County, New York, 27 in Suffolk County, 19 in Queens County, 14 in Westchester County, 13 in Kings County, 9 in Rockland County, 6 in Orange County, 5 in New York City, and 2 in Bronx County, as well as 1 office each of Sullivan, Ulster, and Putnam Counties in New York; and 1 office in Bergen County, New Jersey. The company was founded in 1888 and is based in Montebello, New York.

First Bancshares Company Profile

The First Bancshares, Inc. operates as the holding company for The First, A National Banking Association that provides general commercial and retail banking services. The company operates through three segments: Commercial/Retail Bank, Mortgage Banking Division, and Holding Company. It offers deposit services, including checking, NOW, and savings accounts; other time deposits, such as daily money market accounts and longer-term certificates of deposit; and individual retirement accounts. The company also provides commercial loans comprising secured and unsecured loans for working capital, business expansion, and purchase of equipment and machinery; consumer loans consisting of equity lines of credit, as well as secured and unsecured loans for financing automobiles, home improvements, education, and personal investments; and real estate construction and acquisition loans. In addition, it originates loans to purchase existing residential homes or construct new homes, and to refinance existing mortgages; and provides financial and wealth management services. Further, the company offers Internet banking services, voice response telephone inquiry services, commercial sweep accounts, cash management services, safe deposit boxes, travelers checks, mobile deposit, direct deposit of payroll and social security checks, automatic drafts for various accounts, automated teller machines, and credit card services. It primarily serves small to medium-sized businesses, professional concerns, individuals, associations and organizations, and governmental authorities. As of December 31, 2017, the company operated through a network of 3 full-service branches, 1 motor branch, and 4 loan production offices in the states of Mississippi, Alabama, Louisiana, and Florida. The First Bancshares, Inc. was incorporated in 1995 and is headquartered in Hattiesburg, Mississippi.

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