Prosperity Bancshares (NYSE: PB) and Summit Financial Group (NASDAQ:SMMF) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.
Volatility and Risk
Prosperity Bancshares has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, Summit Financial Group has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.
This table compares Prosperity Bancshares and Summit Financial Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Summit Financial Group||15.35%||12.27%||1.09%|
Institutional and Insider Ownership
72.0% of Prosperity Bancshares shares are owned by institutional investors. Comparatively, 20.7% of Summit Financial Group shares are owned by institutional investors. 4.9% of Prosperity Bancshares shares are owned by company insiders. Comparatively, 22.8% of Summit Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Prosperity Bancshares pays an annual dividend of $1.36 per share and has a dividend yield of 2.0%. Summit Financial Group pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. Prosperity Bancshares pays out 34.4% of its earnings in the form of a dividend. Summit Financial Group pays out 36.7% 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. Prosperity Bancshares has increased its dividend for 13 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Prosperity Bancshares and Summit Financial Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Prosperity Bancshares||$720.90 million||6.45||$274.47 million||$3.95||16.94|
|Summit Financial Group||$68.71 million||5.00||$14.91 million||$1.20||23.04|
Prosperity Bancshares has higher revenue and earnings than Summit Financial Group. Prosperity Bancshares is trading at a lower price-to-earnings ratio than Summit Financial Group, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and recommmendations for Prosperity Bancshares and Summit Financial Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Summit Financial Group||0||2||0||0||2.00|
Prosperity Bancshares presently has a consensus target price of $71.05, indicating a potential upside of 6.19%. Summit Financial Group has a consensus target price of $26.50, indicating a potential downside of 4.16%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Prosperity Bancshares is more favorable than Summit Financial Group.
Prosperity Bancshares beats Summit Financial Group on 15 of the 17 factors compared between the two stocks.
Prosperity Bancshares Company Profile
Prosperity Bancshares, Inc. is a financial holding company, which operates through its bank subsidiary, Prosperity Bank (the Bank). The Bank provides a range of financial products and services to small and medium-sized businesses and consumers. The Company, through the Bank, offers a range of loan and deposit products to its customers. At December 31, 2016, the Bank maintained approximately 598,400 separate deposit accounts including certificates of deposit and 53,600 separate loan accounts. It offered commercial real estate (including multifamily residential) and one- to four-family residential loans, as of December 31, 2016. As of December 31, 2016, the Bank operated 245 full service banking locations; 65 in the Houston area; 29 in the South Texas area; 36 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area; 34 in the West Texas area; 16 in the Bryan/College Station area, six in the Central Oklahoma area and eight in the Tulsa, Oklahoma area.
Summit Financial Group Company Profile
Summit Financial Group, Inc. (Summit) is a financial holding company. The Company provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Shenandoah Valley, and Northern region of Virginia. The Company provides these services through its community bank subsidiary, Summit Community Bank (Summit Community or the Bank). The Company operates through two segments: community banking, and insurance & financial services. The community banking segment consists of its full service banks, which offer customers traditional banking products and services through various delivery channels. The insurance & financial services segment includes three insurance agency offices that sell insurance products. The Company also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia, which provides insurance brokerage services to individuals and businesses.
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