Prosperity Bancshares (NYSE: PB) and First Financial Bankshares (NASDAQ:FFIN) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, dividends, earnings, profitability and institutional ownership.
This is a breakdown of recent ratings and target prices for Prosperity Bancshares and First Financial Bankshares, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|First Financial Bankshares||1||5||0||0||1.83|
Volatility and Risk
Prosperity Bancshares has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, First Financial Bankshares has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.
Valuation and Earnings
This table compares Prosperity Bancshares and First Financial Bankshares’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Prosperity Bancshares||$793.99 million||6.40||$272.16 million||$3.93||18.61|
|First Financial Bankshares||$336.99 million||8.97||$120.37 million||$1.81||25.19|
Prosperity Bancshares has higher revenue and earnings than First Financial Bankshares. Prosperity Bancshares is trading at a lower price-to-earnings ratio than First Financial Bankshares, indicating that it is currently the more affordable of the two stocks.
Prosperity Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 2.0%. First Financial Bankshares pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. Prosperity Bancshares pays out 36.6% of its earnings in the form of a dividend. First Financial Bankshares pays out 42.0% 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. 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 First Financial Bankshares’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|First Financial Bankshares||35.72%||12.61%||1.60%|
Institutional & Insider Ownership
76.9% of Prosperity Bancshares shares are owned by institutional investors. Comparatively, 51.4% of First Financial Bankshares shares are owned by institutional investors. 4.9% of Prosperity Bancshares shares are owned by insiders. Comparatively, 5.0% of First Financial Bankshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Prosperity Bancshares beats First Financial Bankshares on 10 of the 16 factors compared between the two stocks.
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.
First Financial Bankshares Company Profile
First Financial Bankshares, Inc. is a financial holding company. The Company, through its subsidiaries, conducts commercial banking business. The Company’s subsidiaries included First Financial Bank, National Association, Abilene, Texas; First Technology Services, Inc., Abilene, Texas; First Financial Trust & Asset Management Company, National Association, Abilene, Texas; First Financial Investments, Inc., Abilene, Texas, First Financial Insurance Agency, Inc., Abilene, Texas, Commercial Bancshares, Inc., and Commercial State Bank, Kingwood, Texas. Its loan portfolio consists of loans made to businesses, professionals, individuals, and farm and ranch operations located in the primary trade areas served by its subsidiary bank. Its securities available-for-sale include the United States Treasury securities, Obligations of the United States Government sponsored enterprises and agencies and Obligations of states and political subdivisions.
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