Central Valley Community Bancorp (NASDAQ: CVCY) and Southern First Bancshares (NASDAQ:SFST) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitabiliy, valuation and analyst recommendations.

Profitability

This table compares Central Valley Community Bancorp and Southern First Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Central Valley Community Bancorp 27.38% 9.91% 1.17%
Southern First Bancshares 20.81% 12.17% 0.98%

Valuation and Earnings

This table compares Central Valley Community Bancorp and Southern First Bancshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Central Valley Community Bancorp $63.00 million 4.41 $16.97 million $1.39 16.37
Southern First Bancshares $52.77 million 4.41 $12.64 million $1.95 18.44

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

Institutional and Insider Ownership

42.6% of Central Valley Community Bancorp shares are held by institutional investors. Comparatively, 57.8% of Southern First Bancshares shares are held by institutional investors. 21.6% of Central Valley Community Bancorp shares are held by insiders. Comparatively, 14.5% of Southern First Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Central Valley Community Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. Southern First Bancshares does not pay a dividend. Central Valley Community Bancorp pays out 17.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent recommendations for Central Valley Community Bancorp and Southern First Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Central Valley Community Bancorp 0 1 0 0 2.00
Southern First Bancshares 0 1 1 0 2.50

Central Valley Community Bancorp presently has a consensus target price of $16.00, suggesting a potential downside of 29.70%. Southern First Bancshares has a consensus target price of $37.00, suggesting a potential upside of 2.92%. Given Southern First Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe Southern First Bancshares is more favorable than Central Valley Community Bancorp.

Volatility and Risk

Central Valley Community Bancorp has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500. Comparatively, Southern First Bancshares has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500.

Summary

Southern First Bancshares beats Central Valley Community Bancorp on 10 of the 16 factors compared between the two stocks.

Central Valley Community Bancorp Company Profile

Central Valley Community Bancorp is a bank holding company, which operates through its subsidiary, Central Valley Community Bank (the Bank). The Company’s principal business is to provide, through its banking subsidiary, financial services in its primary market area in California. It serves over seven contiguous counties in California’s central valley, including Fresno County, Madera County, Merced County, Sacramento County, San Joaquin County, Stanislaus County, and Tulare County, and surrounding areas through the Bank. The Bank conducts a commercial banking business, which includes accepting demand, savings and time deposits and making commercial, real estate and consumer loans. It provides domestic and international wire transfer services and provides safe deposit boxes and other customary banking services. It operates over 20 full-service banking offices in Clovis, Exeter, Fresno, Kerman, Lodi, Madera, Merced, Modesto, Oakhurst, Prather, Sacramento, Stockton, Tracy and Visalia.

Southern First Bancshares Company Profile

Southern First Bancshares, Inc. is a bank holding company that owns the capital stock of Southern First Bank (the Bank), a South Carolina state bank, and all of the stock of Greenville First Statutory Trust I and II (the Trusts). The Bank is a commercial bank with approximately nine retail offices located in Greenville, Columbia and Charleston, South Carolina. The Bank is primarily engaged in the business of accepting demand deposits and savings deposits insured by the Federal Deposit Insurance Corporation (the FDIC) and providing commercial, consumer and mortgage loans to the public. In addition to deposit and loan services, the Company offers other bank services, such as Internet banking, cash management services, safe deposit boxes, direct deposit and automatic drafts for various accounts. The Bank offers a range of lending services, including real estate, commercial, and equity-line consumer loans to individuals and small- to medium-sized businesses, and professional firms.

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