Suruga Bank (OTCMKTS:SUGBY) vs. Provident Financial Services (NYSE:PFS) Critical Review

Suruga Bank (OTCMKTS:SUGBY) and Provident Financial Services (NYSE:PFS) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Volatility & Risk

Suruga Bank has a beta of -0.03, meaning that its stock price is 103% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.

Earnings and Valuation

This table compares Suruga Bank and Provident Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Suruga Bank	$730.15 million	1.89	$230.70 million	$13.12	6.10
Provident Financial Services	$886.84 million	3.26	$291.16 million	$2.35	9.45

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

Insider & Institutional Ownership

72.0% of Provident Financial Services shares are owned by institutional investors. 3.0% of Provident Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Suruga Bank and Provident Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Suruga Bank	0	0	0	0	0.00
Provident Financial Services	0	2	3	2	3.00

Provident Financial Services has a consensus target price of $23.92, indicating a potential upside of 7.66%. Given Provident Financial Services’ stronger consensus rating and higher possible upside, analysts plainly believe Provident Financial Services is more favorable than Suruga Bank.

Dividends

Suruga Bank pays an annual dividend of $2.09 per share and has a dividend yield of 2.6%. Provident Financial Services pays an annual dividend of $0.96 per share and has a dividend yield of 4.3%. Suruga Bank pays out 15.9% of its earnings in the form of a dividend. Provident Financial Services pays out 40.9% 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.

Profitability

This table compares Suruga Bank and Provident Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Suruga Bank	33.98%	11.31%	0.99%
Provident Financial Services	21.95%	10.98%	1.23%

Summary

Provident Financial Services beats Suruga Bank on 13 of the 17 factors compared between the two stocks.

About Suruga Bank

Suruga Bank Ltd. provides various banking and financial products and services to individuals and corporate customers in Japan. The company offers deposit products, such as time, ordinary, savings, foreign currency, and other deposits, as well as current and general accounts; card, housing, second house, startup, and business up term loans, as well as loans by purpose; credit and debit cards; overdrafts; and other financing products. It also provides investment trust, public bond, pension contribution, insurance, inheritance/trust, lottery, foreign currency, pay-easy, web direct, safe deposit box, external linkage, foreign remittance, fund management, e-combination, payment, nursing care/medical care/dispensing compensation receivable factoring, mortgage, and Internet and telephone banking services. In addition, the company offers staffing, money lending, guarantee, printing, leasing, and agency services. The company was incorporated in 1895 and is headquartered in Numazu, Japan.

About Provident Financial Services

Provident Financial Services, Inc. operates as the bank holding company for Provident Bank that provides various banking products and services to individuals, families, and businesses in the United States. Its deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA products. The company's loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, retail and industrial properties, and office buildings; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, personal loans and unsecured lines of credit, and auto and recreational vehicle loans. It also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, the company provides wealth management services comprising investment management, trust and estate administration, financial planning, and tax compliance and planning. Further, it sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure. The company was founded in 1839 and is headquartered in Jersey City, New Jersey.