Contrasting Franklin Financial Network (NYSE:FSB) & QCR (NYSE:QCRH)

Franklin Financial Network (NYSE:FSB) and QCR (NASDAQ:QCRH) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, valuation, analyst recommendations, profitability and earnings.

Dividends

Franklin Financial Network pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. QCR pays an annual dividend of $0.24 per share and has a dividend yield of 0.6%. Franklin Financial Network pays out 5.9% of its earnings in the form of a dividend. QCR pays out 7.8% 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.

Valuation and Earnings

This table compares Franklin Financial Network and QCR’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franklin Financial Network $180.61 million 2.52 $34.51 million $2.71 11.47
QCR $224.42 million 2.75 $43.12 million $3.08 12.70

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

Institutional & Insider Ownership

64.3% of Franklin Financial Network shares are owned by institutional investors. Comparatively, 60.1% of QCR shares are owned by institutional investors. 11.7% of Franklin Financial Network shares are owned by company insiders. Comparatively, 7.2% of QCR shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Franklin Financial Network has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, QCR has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares Franklin Financial Network and QCR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franklin Financial Network 11.40% 8.23% 0.74%
QCR 18.53% 10.82% 1.04%

Analyst Recommendations

This is a summary of recent recommendations for Franklin Financial Network and QCR, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Financial Network 1 2 2 0 2.20
QCR 0 0 3 0 3.00

Franklin Financial Network currently has a consensus price target of $33.50, indicating a potential upside of 7.79%. QCR has a consensus price target of $42.33, indicating a potential upside of 8.21%. Given QCR’s stronger consensus rating and higher possible upside, analysts clearly believe QCR is more favorable than Franklin Financial Network.

Summary

QCR beats Franklin Financial Network on 12 of the 16 factors compared between the two stocks.

Franklin Financial Network Company Profile

Franklin Financial Network, Inc. operates as the bank holding company for Franklin Synergy Bank that provides banking and related financial services to small businesses, corporate entities, local governments, and individuals. Its deposit products include checking, savings, and certificate of deposit accounts; and demand deposits, interest-bearing transaction accounts, money market accounts, and municipal deposits. The company also provides construction and land development, commercial real estate, residential real estate, commercial and industrial, and consumer and other loans. In addition, it offers retirement planning, financial planning, and investment services, as well as insurance products; and Internet banking, remote deposit capture, lockbox, and treasury management services. The company operates through 15 branches and a loan production office in the Williamson, Rutherford, and Davidson counties in the Nashville metropolitan area. Franklin Financial Network, Inc. was founded in 2007 and is headquartered in Franklin, Tennessee.

QCR Company Profile

QCR Holdings, Inc., a multi-bank holding company, provides commercial and consumer banking, and trust and asset management services. The company operates through Commercial Banking and Wealth Management segments. Its deposit products include noninterest and interest-bearing demand, time, and brokered time deposits. The company also provides various commercial and retail lending/leasing, and investment services to corporations, partnerships, individuals, and government agencies. Its loan portfolio comprises loans to small and mid-sized businesses; business loans, including lines of credit for working capital and operational purposes; term loans for the acquisition of facilities, equipment, and other purposes; commercial and residential real estate loans; and installment and other consumer loans, such as home improvement, home equity, motor vehicle, and signature loans, as well as small personal credit lines. In addition, the company engages in leasing machinery and equipment to commercial and industrial businesses under direct financing lease contracts; and issuing various trust preferred securities. It serves the Quad Cities, Cedar Rapids, Waterloo/Cedar Falls, Des Moines/Ankeny, and Rockford communities. The company was founded in 1993 and is headquartered in Moline, Illinois.

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