Recent analysis comparing two small-cap financial institutions, Southern First Bancshares and First National Corporation, reveals significant differences in their performance and investment potential. By examining their dividends, institutional ownership, valuation metrics, earnings, and analyst recommendations, investors can make informed decisions regarding these stocks.
Profitability Insights
A crucial factor in evaluating financial institutions is profitability, which can be measured through net margins, return on equity, and return on assets. The recent figures indicate that First National boasts a net margin of 9.53%, a return on equity of 11.34%, and a return on assets of 0.96%. In contrast, Southern First Bancshares achieves higher net margins at 11.83%, although its return on equity stands at 7.63%, and its return on assets is 0.61%. This suggests that while Southern First is more efficient in converting sales into profit, First National utilizes its equity more effectively.
Analyst Recommendations and Target Prices
Analysts have provided ratings that further illuminate these companies’ prospects. According to MarketBeat.com, First National received a consensus target price of $28.50, suggesting a potential upside of 12.12%. Conversely, Southern First Bancshares carries a consensus target price of $51.00, which indicates a potential downside of 3.39%. These figures imply that analysts currently view First National as the more favorable investment option.
Institutional ownership also plays a critical role in assessing stock stability. Approximately 33.9% of First National’s shares are held by institutional investors, while a substantial 75.0% of Southern First Bancshares’ shares fall into this category. This level of institutional investment suggests that Southern First is perceived as a more secure long-term investment by major financial entities.
Valuation Metrics
When comparing valuation metrics, Southern First Bancshares outperforms First National in key areas. Southern First reported gross revenue of $213.35 million and net income of $15.53 million, resulting in earnings per share (EPS) of $3.23. Its price-to-earnings (P/E) ratio stands at 16.34. In comparison, First National reported gross revenue of $92.70 million and net income of $6.97 million, with an EPS of $1.26 and a P/E ratio of 20.17. This data indicates that Southern First not only has higher revenue and earnings but is also trading at a more attractive valuation relative to its earnings.
Risk and volatility are essential factors for investors. First National has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500. In contrast, Southern First has a beta of 0.74, suggesting it is 26% less volatile. This lower volatility may appeal to risk-averse investors seeking stability.
Company Profiles
First National Corporation, established in 1907 and headquartered in Strasburg, Virginia, offers a range of commercial banking services. Its products include various deposit accounts, loans for individuals and businesses, and wealth management services. The company serves a diverse clientele, including small to medium-sized businesses and non-profit organizations.
On the other hand, Southern First Bancshares, incorporated in 1999 and based in Greenville, South Carolina, provides commercial, consumer, and mortgage loans across South Carolina, North Carolina, and Georgia. The bank offers a comprehensive suite of deposit products and services tailored to the needs of its customers, including online banking and cash management solutions.
In summary, while both institutions have unique strengths, Southern First Bancshares demonstrates stronger revenue and profitability metrics, along with higher institutional ownership. However, analysts currently favor First National due to its potential stock appreciation. Investors should weigh these factors carefully to align their investment strategies with their financial goals.
