Sterling Bancorp (NYSE:STL) and Southern First Bancshares (NASDAQ:SFST) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

95.9% of Sterling Bancorp shares are held by institutional investors. Comparatively, 72.9% of Southern First Bancshares shares are held by institutional investors. 1.7% of Sterling Bancorp shares are held by company insiders. Comparatively, 10.5% of Southern First Bancshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Sterling Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.5%. Southern First Bancshares does not pay a dividend. Sterling Bancorp pays out 14.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sterling Bancorp and Southern First Bancshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sterling Bancorp 0 0 8 0 3.00
Southern First Bancshares 0 0 1 0 3.00

Sterling Bancorp presently has a consensus price target of $25.14, indicating a potential upside of 32.47%. Given Sterling Bancorp’s higher possible upside, research analysts plainly believe Sterling Bancorp is more favorable than Southern First Bancshares.

Risk & Volatility

Sterling Bancorp has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Southern First Bancshares has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares Sterling Bancorp and Southern First Bancshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sterling Bancorp $1.31 billion 2.97 $447.25 million $2.00 9.49
Southern First Bancshares $86.86 million 3.28 $22.29 million $2.88 13.10

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

Profitability

This table compares Sterling Bancorp and Southern First Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sterling Bancorp 32.55% 10.37% 1.45%
Southern First Bancshares 25.39% 13.94% 1.26%

Summary

Sterling Bancorp beats Southern First Bancshares on 9 of the 15 factors compared between the two stocks.

Sterling Bancorp Company Profile

Sterling Bancorp operates as the bank holding company for Sterling National Bank that provides various banking products and services to commercial, consumer, and municipal clients in the United States. The company accepts deposit products, including checking, savings, money market, time, and interest and non-interest bearing demand deposits, as well as certificates of deposit and mortgage escrow funds. It originates various loans that comprise residential and commercial mortgage loans; commercial and industrial, asset-based, payroll finance, warehouse, factored receivables, equipment finance, public sector, and commercial real estate and multi-family loans; consumer loans, such as homeowner loans, home equity lines of credit, new and used automobile loans, and personal unsecured loans; and acquisition, development, and construction loans. In addition, the company engages in the third-party provider to sell mutual funds and annuities; and provision of annuity and wealth management products. As of December 31, 2018, it operated 106 full-service retail and commercial financial centers, which comprise 24 offices are located in Nassau County, 22 in Suffolk County, 14 in Queens County, 12 in Westchester County, 11 in Kings County, 8 in Rockland County, 6 in Orange County, 3 in New York City, and 2 in Bronx County, as well as 1 office each in Sullivan, Ulster, and Putnam Counties in New York; and 1 office in Bergen County, New Jersey. The company was founded in 1888 and is based in Montebello, New York.

Southern First Bancshares Company Profile

Southern First Bancshares, Inc. operates as the bank holding company for Southern First Bank that provides various banking products and services to general public in South Carolina, North Carolina, and Georgia. It accepts various deposit products that include checking accounts, commercial checking accounts, savings accounts, and other time deposits, including daily money market accounts and long-term certificates of deposit. The company's loan portfolio comprises commercial real estate loans; construction real estate loans; commercial business loans for various lines of businesses, such as the manufacturing, service industry, and professional service areas; consumer real estate and home equity loans; and other consumer loans, including secured and unsecured installment loans and revolving lines of credit. In addition, it provides other bank services, such as Internet banking, cash management, safe deposit boxes, direct deposit, automatic drafts, bill payment, and mobile banking services. The company operates through 10 retail offices located in Greenville, Columbia, and Charleston; 2 retail offices located in Raleigh and Greensboro markets; and 1 retail office located in Atlanta. Southern First Bancshares, Inc. was founded in 1999 and is headquartered in Greenville, South Carolina.

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