Provident Financial Services (NYSE:PFS) and Kearny Financial (NASDAQ:KRNY) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Dividends

Provident Financial Services pays an annual dividend of $0.92 per share and has a dividend yield of 7.5%. Kearny Financial pays an annual dividend of $0.32 per share and has a dividend yield of 3.8%. Provident Financial Services pays out 52.9% of its earnings in the form of a dividend. Kearny Financial pays out 68.1% 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. Provident Financial Services has increased its dividend for 9 consecutive years and Kearny Financial has increased its dividend for 4 consecutive years. Provident Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Provident Financial Services and Kearny Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Provident Financial Services 25.88% 8.08% 1.14%
Kearny Financial 16.78% 3.91% 0.66%

Volatility and Risk

Provident Financial Services has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, Kearny Financial has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Provident Financial Services and Kearny Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Provident Financial Services 0 1 1 0 2.50
Kearny Financial 0 2 0 0 2.00

Provident Financial Services presently has a consensus target price of $26.00, indicating a potential upside of 111.38%. Kearny Financial has a consensus target price of $13.25, indicating a potential upside of 55.33%. Given Provident Financial Services’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Provident Financial Services is more favorable than Kearny Financial.

Insider & Institutional Ownership

66.9% of Provident Financial Services shares are owned by institutional investors. Comparatively, 65.9% of Kearny Financial shares are owned by institutional investors. 3.4% of Provident Financial Services shares are owned by company insiders. Comparatively, 4.6% of Kearny Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Provident Financial Services and Kearny Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Provident Financial Services $435.26 million 1.86 $112.63 million $1.74 7.07
Kearny Financial $250.89 million 2.88 $42.14 million $0.47 18.15

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

Summary

Provident Financial Services beats Kearny Financial on 14 of the 17 factors compared between the two stocks.

Provident Financial Services Company Profile

Provident Financial Services, Inc. operates as the holding company for Provident Bank that provides various banking services to individuals, families, and businesses in the United States. The company's deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA, and KEOGH products. Its loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, and retail and industrial properties; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, and marine loans. The company also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, it provides trust and estate administration services; and asset management services comprising investment management, asset allocation, trust and estate administration, financial planning, tax compliance and planning, and family office services to individuals, municipalities, non-profits, corporations, and pension funds. Further, the company sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure. As of December 31, 2018, it operated 84 full-service branch offices in northern and central New Jersey, as well as in Pennsylvania. The company was founded in 1839 and is headquartered in Jersey City, New Jersey.

Kearny Financial Company Profile

Kearny Financial Corp. operates as the holding company for Kearny Bank that provides various banking products and services in the United States. The company offers various deposit products, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, savings accounts, and certificates of deposit accounts. It also provides various loans, such as one-to-four family mortgage loans; commercial mortgages, including loans secured by multi-family, mixed-use, and nonresidential properties; secured and unsecured business loans; consumer loans, such as home equity loans, home equity lines of credit, account loans, overdraft lines of credit, vehicle loans, personal loans, and loans secured by savings accounts and certificates of deposit; and construction loans to builders/developers and individual homeowners. In addition, the company engages in investment activities. As of August 15, 2018, it operated a total of 54 retail branch offices located throughout northern and central New Jersey, and Brooklyn and Staten Island, New York. The company was founded in 1884 and is headquartered in Fairfield, New Jersey.

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