First Bancshares (NASDAQ: FBMS) and Blue Hills Bancorp (NASDAQ:BHBK) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, dividends, risk, institutional ownership, analyst recommendations, earnings and profitability.

Institutional and Insider Ownership

47.4% of First Bancshares shares are held by institutional investors. Comparatively, 51.9% of Blue Hills Bancorp shares are held by institutional investors. 8.1% of First Bancshares shares are held by insiders. Comparatively, 3.7% of Blue Hills Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares First Bancshares and Blue Hills Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Bancshares 14.14% 9.20% 0.89%
Blue Hills Bancorp 19.33% 3.50% 0.55%

Volatility & Risk

First Bancshares has a beta of -0.29, meaning that its share price is 129% less volatile than the S&P 500. Comparatively, Blue Hills Bancorp has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for First Bancshares and Blue Hills Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Bancshares 0 0 1 0 3.00
Blue Hills Bancorp 0 2 0 0 2.00

First Bancshares presently has a consensus price target of $39.00, indicating a potential upside of 15.38%. Blue Hills Bancorp has a consensus price target of $22.50, indicating a potential upside of 6.89%. Given First Bancshares’ stronger consensus rating and higher probable upside, equities research analysts clearly believe First Bancshares is more favorable than Blue Hills Bancorp.

Dividends

First Bancshares pays an annual dividend of $0.15 per share and has a dividend yield of 0.4%. Blue Hills Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 2.9%. First Bancshares pays out 13.0% of its earnings in the form of a dividend. Blue Hills Bancorp pays out 75.0% 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.

Valuation and Earnings

This table compares First Bancshares and Blue Hills Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Bancshares $55.85 million 6.76 $10.11 million $1.15 29.39
Blue Hills Bancorp $81.67 million 6.92 $8.65 million $0.80 26.31

First Bancshares has higher earnings, but lower revenue than Blue Hills Bancorp. Blue Hills Bancorp is trading at a lower price-to-earnings ratio than First Bancshares, indicating that it is currently the more affordable of the two stocks.

Summary

First Bancshares beats Blue Hills Bancorp on 10 of the 16 factors compared between the two stocks.

First Bancshares Company Profile

The First Bancshares, Inc. is a bank holding company for The First, A National Banking Association (the Bank). The Company and the Bank engage in a general commercial and retail banking business for small to medium-sized businesses, professional concerns and individuals. The Bank provides a range of banking services in its primary market area of South Mississippi, South Alabama and Louisiana. The Bank offers a range of commercial and personal loans. Commercial loans include both secured and unsecured loans for working capital (including loans secured by inventory and accounts receivable), business expansion (including acquisition of real estate and improvements), and purchase of equipment and machinery. The Bank offers a range of deposit services, including noninterest-bearing accounts, negotiable order of withdrawal (NOW) accounts, money market accounts, savings accounts and time deposits.

Blue Hills Bancorp Company Profile

Blue Hills Bancorp, Inc. is a bank holding company for the Blue Hills Bank (the Bank). Blue Hills Bank is a Massachusetts-chartered savings bank. As of December 31, 2016, the Bank provided financial services to individuals, families, small to mid-size businesses and government and non-profit organizations online and through its 11 full-service branch offices located in Brookline, Dedham, Hyde Park, Milton, Nantucket, Norwood, West Roxbury, and Westwood, Massachusetts. Its primary deposit-taking market includes Norfolk, Suffolk and Nantucket Counties in Massachusetts, and its lending market is primarily based in eastern Massachusetts. Its business consists primarily of accepting deposits from the general public, commercial businesses and government and non-profit organizations, and investing those deposits, together with funds generated from operations and borrowings in one- to four-family residential mortgage loans, commercial business loans and investment securities, among others.

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