Head to Head Contrast: LegacyTexas Financial Group (LTXB) versus Provident Financial (PROV)

LegacyTexas Financial Group (NASDAQ: PROV) and Provident Financial (NASDAQ:PROV) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.

Valuation and Earnings

This table compares LegacyTexas Financial Group and Provident Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LegacyTexas Financial Group $410.44 million 5.38 $89.49 million $2.18 20.95
Provident Financial $64.61 million 2.09 $2.13 million $0.70 25.91

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

Insider & Institutional Ownership

85.9% of LegacyTexas Financial Group shares are owned by institutional investors. Comparatively, 57.1% of Provident Financial shares are owned by institutional investors. 3.1% of LegacyTexas Financial Group shares are owned by company insiders. Comparatively, 12.7% of Provident Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for LegacyTexas Financial Group and Provident Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LegacyTexas Financial Group 0 3 6 0 2.67
Provident Financial 0 2 0 0 2.00

LegacyTexas Financial Group currently has a consensus target price of $48.92, suggesting a potential upside of 7.09%. Provident Financial has a consensus target price of $19.50, suggesting a potential upside of 7.50%. Given Provident Financial’s higher probable upside, analysts clearly believe Provident Financial is more favorable than LegacyTexas Financial Group.

Dividends

LegacyTexas Financial Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.4%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.1%. LegacyTexas Financial Group pays out 29.4% of its earnings in the form of a dividend. Provident Financial pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LegacyTexas Financial Group has increased its dividend for 2 consecutive years and Provident Financial has increased its dividend for 7 consecutive years. Provident Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares LegacyTexas Financial Group and Provident Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LegacyTexas Financial Group 22.39% 11.24% 1.21%
Provident Financial 3.30% 4.93% 0.51%

Summary

LegacyTexas Financial Group beats Provident Financial on 11 of the 16 factors compared between the two stocks.

LegacyTexas Financial Group Company Profile

LegacyTexas Financial Group, Inc. operates as the holding company for LegacyTexas Bank that provides various banking products and services in the United States. Its deposit products include interest-bearing and non-interest-bearing demand accounts, savings, money market, certificates of deposit, and individual retirement accounts. The company's lending products comprise commercial and consumer real estate loans; secured and unsecured commercial and industrial loans; permanent loans secured by first and second mortgages on one- to four-family residences; construction and land loans; and secured and unsecured consumer loans, including new and used automobile loans, recreational vehicle loans, and loans secured by savings deposits. It also provides insurance and title services. As of January 23, 2018, the company had 3 administrative offices, 44 full-service branches, and 1 commercial loan production office located in Houston, Texas, as well as a Warehouse Purchase Program office located in Littleton, Colorado. The company was formerly known as ViewPoint Financial Group, Inc. and changed its name to LegacyTexas Financial Group, Inc. in January 2015. LegacyTexas Financial Group, Inc. is headquartered in Plano, Texas.

Provident Financial Company Profile

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community and mortgage banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. It operates through two segments, Provident Bank and Provident Bank Mortgage. The company's deposit products include non-interest-bearing and interest-bearing checking accounts, savings accounts, money market accounts, and time deposits; and loan portfolio comprises single-family, multi-family, commercial real estate, construction, commercial business, consumer, and other mortgage loans. It also originates, purchases, and sells single-family mortgage loans, including second mortgages and equity lines of credit. In addition, the company offers investment services comprising the sale of investment products, such as annuities and mutual funds, as well as trustee services for real estate transactions. It operates 13 full-service banking offices in Riverside County and 1 full-service banking office in San Bernardino County. The company was founded in 1956 and is headquartered in Riverside, California.

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