Square 1 Financial (NASDAQ: SQBK) and Sterling Bancorp (NYSE:STL) are both financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, valuation, risk, analyst recommendations and dividends.

Dividends

Sterling Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.1%. Square 1 Financial does not pay a dividend. Sterling Bancorp pays out 22.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current recommendations and price targets for Square 1 Financial and Sterling Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Square 1 Financial 0 0 0 0 N/A
Sterling Bancorp 0 2 8 0 2.80

Sterling Bancorp has a consensus target price of $27.42, suggesting a potential upside of 9.89%. Given Sterling Bancorp’s higher probable upside, analysts plainly believe Sterling Bancorp is more favorable than Square 1 Financial.

Institutional & Insider Ownership

91.7% of Sterling Bancorp shares are held by institutional investors. 3.7% of Sterling Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Square 1 Financial and Sterling Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Square 1 Financial 25.41% 12.33% 1.10%
Sterling Bancorp 28.58% 9.08% 1.14%

Earnings & Valuation

This table compares Square 1 Financial and Sterling Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Square 1 Financial N/A N/A N/A $1.17 22.50
Sterling Bancorp $532.54 million 10.53 $139.97 million $1.24 20.12

Sterling Bancorp has higher revenue and earnings than Square 1 Financial. Sterling Bancorp is trading at a lower price-to-earnings ratio than Square 1 Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Sterling Bancorp beats Square 1 Financial on 9 of the 11 factors compared between the two stocks.

About Square 1 Financial

Square 1 Financial, Inc. is a financial services company. The Company is a bank holding company for Square 1 Bank. Through Square 1 Bank, the Company offers a range of banking and financial products and services throughout the United States, focused on the entrepreneurial community and venture capital and private equity firms. Its primary focus is on venture-backed technology and life sciences companies located throughout the United States. It also focuses on venture firms. The Company is also involved in networking activities in the startup communities in several of its markets. It maintains a presence in these communities through participation in events sponsored by incubators or accelerators, which are informal associations engaged in a range of activities designed to promote and encourage the startup and development of new companies.

About Sterling Bancorp

Sterling Bancorp is a financial holding company. The Company is a bank holding company that owns the Sterling National Bank (the Bank). The Bank specializes in the delivery of services and solutions to business owners, their families and consumers within the communities it serves. The Bank offers a line of commercial, business, and consumer banking products and services. The Bank is engaged in the origination of commercial loans and commercial mortgage loans. The Company also originates residential mortgage loans and consumer loans. The Bank offers services in the New York Metro Market, which includes Manhattan and Long Island, and the New York Suburban Market, which consists of Rockland, Orange, Sullivan, Ulster, Putnam and Westchester counties in New York and Bergen County in New Jersey. Its deposit products include non-interest bearing demand deposits, interest bearing demand deposits, savings, money market and certificate of deposits.

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