Fidelity Southern (NASDAQ: LION) and Sierra Bancorp (NASDAQ:BSRR) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Dividends

Fidelity Southern pays an annual dividend of $0.48 per share and has a dividend yield of 2.2%. Sierra Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 2.1%. Fidelity Southern pays out 30.0% of its earnings in the form of a dividend. Sierra Bancorp pays out 37.3% 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. Fidelity Southern is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Fidelity Southern and Sierra Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fidelity Southern $290.61 million 2.01 $38.76 million $1.60 13.58
Sierra Bancorp $87.74 million 4.66 $17.56 million $1.50 17.89

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

Volatility & Risk

Fidelity Southern has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Sierra Bancorp has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.

Profitability

This table compares Fidelity Southern and Sierra Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fidelity Southern 13.78% 11.30% 0.94%
Sierra Bancorp 21.59% 9.87% 1.03%

Insider and Institutional Ownership

69.4% of Fidelity Southern shares are owned by institutional investors. Comparatively, 49.2% of Sierra Bancorp shares are owned by institutional investors. 18.8% of Fidelity Southern shares are owned by insiders. Comparatively, 20.8% of Sierra Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Fidelity Southern and Sierra Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fidelity Southern 0 2 1 0 2.33
Sierra Bancorp 0 3 1 0 2.25

Fidelity Southern currently has a consensus price target of $24.50, suggesting a potential upside of 12.75%. Sierra Bancorp has a consensus price target of $27.94, suggesting a potential upside of 4.09%. Given Fidelity Southern’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Fidelity Southern is more favorable than Sierra Bancorp.

Summary

Fidelity Southern beats Sierra Bancorp on 10 of the 15 factors compared between the two stocks.

About Fidelity Southern

Fidelity Southern Corporation is a bank holding company. The Company conducts its operations through its subsidiary bank, Fidelity Bank, which is a state chartered bank (the Bank). The Company provides an array of financial products and services for business and retail customers in the metropolitan Atlanta and Jacksonville, Orlando and Sarasota-Bradenton, Florida markets. The Company provides mortgage loans, indirect automobile loans and Small Business Administration (SBA) loans throughout the South and parts of the Midwest. It delivers its products and services through a network of offices located in Southern states. As of December 31, 2016, it owned 55 and leased 10 retail bank branches and it leased 27 loan production offices. The Company is primarily engaged in attracting deposits from individuals and businesses and using these deposits and borrowed funds to originate commercial, residential mortgage, construction and installment loans.

About Sierra Bancorp

Sierra Bancorp is a bank holding company for Bank of the Sierra (the Bank). The Bank is a state-chartered bank, which offers a range of retail and commercial banking services. The Bank’s products and services are related to the business of lending money and accepting deposits. Its customers have access to electronic point-of-sale payment alternatives around the country through the Pulse Electronic Funds Transfer (EFT) network. Its Internet branch provides the ability to open deposit accounts online; an online banking option with bill-pay and mobile banking capabilities, including mobile check deposit; a customer service center that is accessible by toll-free telephone during business hours, and an automated telephone banking system. It offers a range of other banking products and services to complement and support its lending and deposit products, including remote deposit capture and automated payroll services for business customers.

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