Yadkin Financial (NYSE: YDKN) and Pacific Continental (NASDAQ:PCBK) are both small-cap financials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, risk, institutional ownership, valuation, analyst recommendations and dividends.

Dividends

Yadkin Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Pacific Continental pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. Yadkin Financial pays out 35.7% of its earnings in the form of a dividend. Pacific Continental pays out 38.9% 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. Pacific Continental has increased its dividend for 2 consecutive years. Pacific Continental is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

69.7% of Yadkin Financial shares are owned by institutional investors. Comparatively, 67.5% of Pacific Continental shares are owned by institutional investors. 3.0% of Yadkin Financial shares are owned by company insiders. Comparatively, 4.8% of Pacific Continental shares are owned by company 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 Ratings

This is a breakdown of recent recommendations and price targets for Yadkin Financial and Pacific Continental, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yadkin Financial 0 0 0 0 N/A
Pacific Continental 0 2 1 0 2.33

Pacific Continental has a consensus target price of $28.00, suggesting a potential upside of 0.00%. Given Pacific Continental’s higher probable upside, analysts plainly believe Pacific Continental is more favorable than Yadkin Financial.

Valuation and Earnings

This table compares Yadkin Financial and Pacific Continental’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Yadkin Financial N/A N/A N/A $1.12 30.79
Pacific Continental $97.76 6,521,685.76 $19.77 $1.13 24.78

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

Volatility and Risk

Yadkin Financial has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Pacific Continental has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Profitability

This table compares Yadkin Financial and Pacific Continental’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yadkin Financial 18.40% 5.41% 0.75%
Pacific Continental 26.45% 10.15% 1.10%

Summary

Pacific Continental beats Yadkin Financial on 10 of the 14 factors compared between the two stocks.

Yadkin Financial Company Profile

Yadkin Financial Corporation is a bank holding company. The Company conducts its business operations through its subsidiary, Yadkin Bank, which is a chartered community bank that provides services in approximately 110 branches across North Carolina and South Carolina. Yadkin Bank provides banking, mortgage, investment and insurance services to businesses and consumers across the Carolinas. It operates through a segment, which is providing general commercial banking and financial services to individuals and businesses located in North Carolina and South Carolina, and to customers in various states through its Small Business Administration (SBA) lending program. It offers various loans, such as commercial and industrial (C&I) loans and government-guaranteed loans. The Company’s investment securities portfolio includes the United States Government-sponsored enterprise (GSE) obligations and securities guaranteed by the United States SBA. The Company’s primary source of funds is deposits.

Pacific Continental Company Profile

Pacific Continental Corporation is a bank holding company. The Company’s principal business activities are conducted through its subsidiary, Pacific Continental Bank (the Bank), an Oregon state-chartered bank with deposits insured by the Federal Deposit Insurance Corporation. The Bank operates in three primary markets: Eugene, Oregon, Portland; Oregon/Southwest Washington, and Seattle, Washington. As of December 31, 2016, the Bank operated 15 full-service offices in Oregon and Washington and two loan production offices in Washington and Colorado. The Bank primarily operates in large commercial markets and provides banking and related services designed for community-based businesses, nonprofit organizations, professional service providers and banking services for business owners. It provides traditional commercial and consumer banking services, including cash management products for businesses, online banking, safe deposit services debit and automated teller machine cards and others.

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