Porter Bancorp (NASDAQ: PBIB) and Ocwen Financial Corporation (NYSE:OCN) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitabiliy, analyst recommendations, valuation, institutional ownership, dividends, earnings and risk.

Analyst Ratings

This is a breakdown of current ratings and target prices for Porter Bancorp and Ocwen Financial Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Porter Bancorp 0 0 0 0 N/A
Ocwen Financial Corporation 0 5 0 0 2.00

Ocwen Financial Corporation has a consensus price target of $4.00, indicating a potential upside of 47.06%. Given Ocwen Financial Corporation’s higher possible upside, analysts clearly believe Ocwen Financial Corporation is more favorable than Porter Bancorp.

Risk and Volatility

Porter Bancorp has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500. Comparatively, Ocwen Financial Corporation has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

18.4% of Porter Bancorp shares are owned by institutional investors. Comparatively, 47.3% of Ocwen Financial Corporation shares are owned by institutional investors. 28.7% of Porter Bancorp shares are owned by insiders. Comparatively, 5.2% of Ocwen Financial Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Porter Bancorp and Ocwen Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Porter Bancorp -6.37% -7.18% -0.27%
Ocwen Financial Corporation -8.79% -5.55% -0.47%

Earnings and Valuation

This table compares Porter Bancorp and Ocwen Financial Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Porter Bancorp $36.05 million 1.70 -$2.74 million ($0.45) -22.33
Ocwen Financial Corporation $1.38 billion 0.25 $328.49 million ($0.97) -2.80

Ocwen Financial Corporation has higher revenue and earnings than Porter Bancorp. Porter Bancorp is trading at a lower price-to-earnings ratio than Ocwen Financial Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Porter Bancorp beats Ocwen Financial Corporation on 6 of the 11 factors compared between the two stocks.

About Porter Bancorp

Porter Bancorp, Inc. is a bank holding company. The Company operates through its subsidiary, PBI Bank (the Bank). The Bank is a community bank with a range of commercial and personal banking products. It offers retail and commercial deposit products. It offers drive-in banking facilities, automatic teller machines, night depository, personalized checks, credit cards, debit cards, Internet banking, mobile banking, treasury management services, remote deposit services, electronic funds transfers through automated clearing house services, domestic and foreign wire transfers, cash management, vault services, and loan and deposit sweep accounts. It operates banking offices in approximately 12 counties in Kentucky. Its markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt. It serves south central Kentucky and southern Kentucky from banking offices in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess Counties.

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company. The Company, through its subsidiaries, originates and services loans. The Company’s segments include Servicing, Lending, and Corporate Items and Other. The Company’s Servicing segment consists of its residential servicing business. The Company’s Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans. The Company’s Corporate Items and Other segment includes revenues and expenses of Automotive Capital Services (ACS) and its other business activities. Its servicing clients include some of the financial institutions in the United States, including the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae) and non-Agency residential mortgage-backed securities (RMBS) trusts.

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