Analyzing First Commonwealth Financial (NYSE:FCF) and Peapack-Gladstone Financial (NASDAQ:PGC)

First Commonwealth Financial (NYSE:FCF) and Peapack-Gladstone Financial (NASDAQ:PGC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and recommmendations for First Commonwealth Financial and Peapack-Gladstone Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Commonwealth Financial	0	3	3	0	2.50
Peapack-Gladstone Financial	0	1	3	0	2.75

First Commonwealth Financial presently has a consensus target price of $20.33, suggesting a potential upside of 6.04%. Peapack-Gladstone Financial has a consensus target price of $40.50, suggesting a potential downside of 9.46%. Given First Commonwealth Financial’s higher probable upside, analysts clearly believe First Commonwealth Financial is more favorable than Peapack-Gladstone Financial.

Dividends

First Commonwealth Financial pays an annual dividend of $0.56 per share and has a dividend yield of 2.9%. Peapack-Gladstone Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.4%. First Commonwealth Financial pays out 37.1% of its earnings in the form of a dividend. Peapack-Gladstone Financial pays out 8.1% 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. First Commonwealth Financial has increased its dividend for 9 consecutive years. First Commonwealth Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares First Commonwealth Financial and Peapack-Gladstone Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Commonwealth Financial	21.19%	10.56%	1.32%
Peapack-Gladstone Financial	9.60%	6.75%	0.59%

Valuation & Earnings

This table compares First Commonwealth Financial and Peapack-Gladstone Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Commonwealth Financial	$729.51 million	2.67	$152.30 million	$1.51	12.70
Peapack-Gladstone Financial	$444.61 million	1.78	$37.33 million	$2.48	18.04

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

Insider and Institutional Ownership

72.6% of First Commonwealth Financial shares are held by institutional investors. Comparatively, 72.8% of Peapack-Gladstone Financial shares are held by institutional investors. 1.9% of First Commonwealth Financial shares are held by insiders. Comparatively, 5.8% of Peapack-Gladstone Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

First Commonwealth Financial has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Peapack-Gladstone Financial has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Summary

First Commonwealth Financial beats Peapack-Gladstone Financial on 10 of the 16 factors compared between the two stocks.

About First Commonwealth Financial

First Commonwealth Financial Corporation, a financial holding company, provides various consumer and commercial banking services in the United States. Its consumer services include personal checking accounts, interest-earning checking accounts, savings and health savings accounts, insured money market accounts, debit cards, investment certificates, fixed and variable rate certificates of deposit, mortgage loans, secured and unsecured installment loans, construction and real estate loans, safe deposit facilities, credit cards, credit lines with overdraft checking protection, IRA accounts, and automated teller machine (atm) services, as well as internet, mobile, and telephone banking services. The company's commercial banking services comprise commercial lending, business checking accounts, online account management services, payroll direct deposits, commercial cash management services, and repurchase agreements, as well as ACH origination services. In addition, it offers various trust and asset management services; auto, home, and business insurance, as well as term life insurance; and annuities, mutual funds, and stock and bond brokerage services through a broker-dealer and insurance brokers. The company was founded in 1934 and is headquartered in Indiana, Pennsylvania.

About Peapack-Gladstone Financial

Peapack-Gladstone Financial Corporation operates as the bank holding company for Peapack-Gladstone Bank that provides private banking and wealth management services in the United States. The company operates in two segments, Banking and Peapack Private. It offers checking and savings accounts, money market and interest-bearing checking accounts, certificates of deposit, and individual retirement accounts. The company also provides working capital lines of credit, term loans for fixed asset acquisitions, commercial mortgages, multi-family mortgages, and other forms of asset-based financing services; and residential mortgages, home equity lines of credit, and other second mortgage loans. In addition, it offers corporate and industrial (C&I) and equipment finance, commercial real estate, multifamily, residential, and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; investment management services; personal trust services, including services as executor, trustee, administrator, custodian, and guardian; and other financial planning, tax preparation, and advisory services. Further, the company provides telephone and Internet banking, merchant credit card, and customer support sales services. Its private banking clients include businesses, non-profits, and consumers; wealth management clients comprise individuals, families, foundations, endowments, trusts, and estates; and commercial loan clients include business owners, professionals, retailers, contractors, and real estate investors. The company operates its private banking locations in Bedminster, Morristown, Princeton, and Teaneck, New Jersey; and branches in Somerset, Morris, Hunterdon, and Union counties, as well as operates automated teller machines. Peapack-Gladstone Financial Corporation was founded in 1921 and is headquartered in Bedminster, New Jersey.