Analyzing Prosperity Bancshares (PB) and Live Oak Bancshares (LOB)
Prosperity Bancshares (NYSE: PB) and Live Oak Bancshares (NASDAQ:LOB) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, profitability, earnings, dividends, valuation, risk and analyst recommendations.
Prosperity Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 2.1%. Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Prosperity Bancshares pays out 36.5% of its earnings in the form of a dividend. Live Oak Bancshares pays out 12.9% 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 raised its dividend for 14 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Prosperity Bancshares and Live Oak Bancshares’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Prosperity Bancshares||$794.20 million||6.10||$274.46 million||$3.95||17.65|
|Live Oak Bancshares||$150.81 million||6.32||$13.77 million||$0.93||25.70|
Prosperity Bancshares has higher revenue and earnings than Live Oak Bancshares. Prosperity Bancshares is trading at a lower price-to-earnings ratio than Live Oak Bancshares, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
76.8% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 40.9% of Live Oak Bancshares shares are held by institutional investors. 4.9% of Prosperity Bancshares shares are held by company insiders. Comparatively, 30.1% of Live Oak Bancshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares Prosperity Bancshares and Live Oak Bancshares’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Live Oak Bancshares||17.68%||13.60%||1.72%|
This is a summary of recent ratings and price targets for Prosperity Bancshares and Live Oak Bancshares, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Live Oak Bancshares||0||1||2||0||2.67|
Prosperity Bancshares presently has a consensus target price of $72.75, suggesting a potential upside of 4.36%. Live Oak Bancshares has a consensus target price of $25.67, suggesting a potential upside of 7.39%. Given Live Oak Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Live Oak Bancshares is more favorable than Prosperity Bancshares.
Volatility & Risk
Prosperity Bancshares has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, Live Oak Bancshares has a beta of -0.03, suggesting that its share price is 103% less volatile than the S&P 500.
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.
Live Oak Bancshares Company Profile
Live Oak Bancshares, Inc. is a bank holding company. The Company conducts business operations primarily through its commercial bank subsidiary, Live Oak Banking Company (the Bank). The Bank specializes in providing lending services to small businesses nationwide in targeted industries. The loans originated by the Bank are guaranteed by the small business administration (SBA). The Company’s loan portfolio includes commercial and industrial loans; construction and development loans; commercial real estate, and commercial land. The Company’s investment securities include the United States Government agencies, residential mortgage-backed securities and mutual fund. The Company’s deposits include non-interest-bearing deposits and interest-bearing deposits, such as interest-bearing checking, money market and time deposits.
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