Contrasting ServisFirst Bancshares (NYSE:SFBS) & Capitol Federal Financial (NASDAQ:CFFN)

ServisFirst Bancshares (NYSE:SFBS) and Capitol Federal Financial (NASDAQ:CFFN) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Dividends

ServisFirst Bancshares pays an annual dividend of $1.34 per share and has a dividend yield of 1.7%. Capitol Federal Financial pays an annual dividend of $0.34 per share and has a dividend yield of 5.6%. ServisFirst Bancshares pays out 30.5% of its earnings in the form of a dividend. Capitol Federal Financial pays out 85.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ServisFirst Bancshares has raised its dividend for 10 consecutive years.

Institutional & Insider Ownership

67.3% of ServisFirst Bancshares shares are held by institutional investors. Comparatively, 88.5% of Capitol Federal Financial shares are held by institutional investors. 6.7% of ServisFirst Bancshares shares are held by company insiders. Comparatively, 3.2% of Capitol Federal Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares ServisFirst Bancshares and Capitol Federal Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	24.16%	15.11%	1.40%
Capitol Federal Financial	12.91%	5.10%	0.55%

Analyst Recommendations

This is a summary of current ratings for ServisFirst Bancshares and Capitol Federal Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	2	0	0	2.00
Capitol Federal Financial	0	2	0	0	2.00

ServisFirst Bancshares currently has a consensus target price of $87.50, suggesting a potential upside of 10.37%. Capitol Federal Financial has a consensus target price of $6.50, suggesting a potential upside of 7.08%. Given ServisFirst Bancshares’ higher probable upside, research analysts clearly believe ServisFirst Bancshares is more favorable than Capitol Federal Financial.

Earnings & Valuation

This table compares ServisFirst Bancshares and Capitol Federal Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$981.18 million	4.41	$227.24 million	$4.40	18.02
Capitol Federal Financial	$382.09 million	2.11	$38.01 million	$0.40	15.18

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

Volatility and Risk

ServisFirst Bancshares has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, Capitol Federal Financial has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Summary

ServisFirst Bancshares beats Capitol Federal Financial on 13 of the 15 factors compared between the two stocks.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

About Capitol Federal Financial

Capitol Federal Financial, Inc. operates as the holding company for Capitol Federal Savings Bank that provides various retail banking products and services in the United States. The company accepts a range of deposit products, including savings accounts, money market accounts, interest-bearing and non-interest-bearing checking accounts, and certificates of deposit. It also provides various loan products, such as one- to four-family residential real estate loans, commercial real estate, commercial and industrial, construction loans, and small business loans, as well as consumer loans, which include home equity loans and lines of credit, home improvement loans, vehicle loans, and loans secured by savings deposits. In addition, the company offers mobile, telephone, and online banking services, as well as bill payment services; credit cards; mortgage loan; operates a call center; and invests in various securities. The company serves the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia, and Salina, Kansas, and a portion of the metropolitan area of greater Kansas City. Capitol Federal Financial, Inc. was founded in 1893 and is headquartered in Topeka, Kansas.