Head-To-Head Contrast: Square 1 Financial (SQBK) & 1st Constitution Bancorp (FCCY)

Square 1 Financial (NASDAQ: SQBK) and 1st Constitution Bancorp (NASDAQ:FCCY) are both small-cap financials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Square 1 Financial and 1st Constitution Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Square 1 Financial 0 0 0 0 N/A
1st Constitution Bancorp 0 1 0 0 2.00

1st Constitution Bancorp has a consensus target price of $18.00, suggesting a potential downside of 6.49%. Given 1st Constitution Bancorp’s higher possible upside, analysts plainly believe 1st Constitution Bancorp is more favorable than Square 1 Financial.

Profitability

This table compares Square 1 Financial and 1st Constitution 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%
1st Constitution Bancorp 13.64% 8.09% 0.84%

Dividends

1st Constitution Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. Square 1 Financial does not pay a dividend. 1st Constitution Bancorp pays out 28.9% of its earnings in the form of a dividend.

Insider and Institutional Ownership

27.9% of 1st Constitution Bancorp shares are held by institutional investors. 14.5% of 1st Constitution Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Square 1 Financial and 1st Constitution 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
1st Constitution Bancorp $49.90 million 3.12 $6.93 million $0.83 23.19

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

Summary

1st Constitution Bancorp beats Square 1 Financial on 6 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 1st Constitution Bancorp

1st Constitution Bancorp is the bank holding company for 1st Constitution Bank (the Bank). The Bank is a commercial bank, which is engaged in the business of commercial and retail banking. The Company operates through the Community Banking segment. The Community Banking segment consists of construction, commercial, retail and mortgage banking operations. As a community bank, the Bank offers a range of services (including demand, savings and time deposits and commercial and consumer/installment loans) to individuals, small businesses and not-for-profit organizations principally in the Fort Lee area of Bergen County and in Middlesex, Mercer, Somerset and Monmouth Counties of New Jersey. The Bank’s Mortgage Warehouse Funding Group offers revolving lines of credit that are available to licensed mortgage banking companies (the Warehouse Line of Credit). The Bank’s investment activities are classified as available for sale and held to maturity securities.

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