First Financial Bankshares (NASDAQ: FFIN) and First Community Bancshares (NASDAQ:FCBC) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Insider and Institutional Ownership

51.4% of First Financial Bankshares shares are owned by institutional investors. Comparatively, 40.6% of First Community Bancshares shares are owned by institutional investors. 5.0% of First Financial Bankshares shares are owned by insiders. Comparatively, 3.3% of First Community Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

First Financial Bankshares has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500. Comparatively, First Community Bancshares has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Profitability

This table compares First Financial Bankshares and First Community Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Financial Bankshares 35.72% 12.61% 1.60%
First Community Bancshares 17.67% 8.07% 1.18%

Dividends

First Financial Bankshares pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. First Community Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.7%. First Financial Bankshares pays out 42.0% of its earnings in the form of a dividend. First Community Bancshares pays out 57.1% 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for First Financial Bankshares and First Community Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Financial Bankshares 1 5 0 0 1.83
First Community Bancshares 0 2 0 0 2.00

First Financial Bankshares currently has a consensus target price of $42.67, indicating a potential downside of 6.43%. First Community Bancshares has a consensus target price of $28.50, indicating a potential upside of 6.94%. Given First Community Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe First Community Bancshares is more favorable than First Financial Bankshares.

Earnings & Valuation

This table compares First Financial Bankshares and First Community Bancshares’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Financial Bankshares $336.99 million 8.97 $120.37 million $1.81 25.19
First Community Bancshares $121.56 million 3.73 $21.49 million $1.26 21.15

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

Summary

First Financial Bankshares beats First Community Bancshares on 12 of the 15 factors compared between the two stocks.

About First Financial Bankshares

First Financial Bankshares, Inc. is a financial holding company. The Company, through its subsidiaries, conducts commercial banking business. The Company’s subsidiaries included First Financial Bank, National Association, Abilene, Texas; First Technology Services, Inc., Abilene, Texas; First Financial Trust & Asset Management Company, National Association, Abilene, Texas; First Financial Investments, Inc., Abilene, Texas, First Financial Insurance Agency, Inc., Abilene, Texas, Commercial Bancshares, Inc., and Commercial State Bank, Kingwood, Texas. Its loan portfolio consists of loans made to businesses, professionals, individuals, and farm and ranch operations located in the primary trade areas served by its subsidiary bank. Its securities available-for-sale include the United States Treasury securities, Obligations of the United States Government sponsored enterprises and agencies and Obligations of states and political subdivisions.

About First Community Bancshares

First Community Bancshares, Inc. is a financial holding company. The Company provides commercial banking products and services through its subsidiary First Community Bank (the Bank). The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. It provides insurance services through its subsidiary First Community Insurance Services, and offers wealth management and investment advice through its Trust Division and subsidiary First Community Wealth Management. Its products include demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement arrangements; commercial, consumer, and real estate mortgage loans and lines of credit; various credit card, debit card, and automated teller machine card services; corporate and personal trust services; investment management services, and life, health, and property and casualty insurance products.

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