Critical Review: ServisFirst Bancshares (NYSE:SFBS) & Simmons First National (NASDAQ:SFNC)

ServisFirst Bancshares (NYSE:SFBS) and Simmons First National (NASDAQ:SFNC) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, profitability, dividends, earnings and analyst recommendations.

Earnings and Valuation

This table compares ServisFirst Bancshares and Simmons First National”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$1.02 billion	4.52	$276.60 million	$2.93	14.37
Simmons First National	$1.43 billion	2.34	-$397.55 million	($2.53)	-9.15

ServisFirst Bancshares has higher earnings, but lower revenue than Simmons First National. Simmons First National is trading at a lower price-to-earnings ratio than ServisFirst Bancshares, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

67.3% of ServisFirst Bancshares shares are held by institutional investors. Comparatively, 27.6% of Simmons First National shares are held by institutional investors. 6.5% of ServisFirst Bancshares shares are held by insiders. Comparatively, 0.8% of Simmons First National shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

ServisFirst Bancshares has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Simmons First National has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.

Dividends

ServisFirst Bancshares pays an annual dividend of $0.76 per share and has a dividend yield of 1.8%. Simmons First National pays an annual dividend of $0.86 per share and has a dividend yield of 3.7%. ServisFirst Bancshares pays out 25.9% of its earnings in the form of a dividend. Simmons First National pays out -34.0% 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. ServisFirst Bancshares has raised its dividend for 10 consecutive years and Simmons First National has raised its dividend for 14 consecutive years. Simmons First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and target prices for ServisFirst Bancshares and Simmons First National, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	1	3	1	3.00
Simmons First National	1	3	4	1	2.56

ServisFirst Bancshares currently has a consensus price target of $47.67, suggesting a potential upside of 13.21%. Simmons First National has a consensus price target of $25.50, suggesting a potential upside of 10.13%. Given ServisFirst Bancshares’ stronger consensus rating and higher possible upside, equities analysts plainly believe ServisFirst Bancshares is more favorable than Simmons First National.

Profitability

This table compares ServisFirst Bancshares and Simmons First National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	30.95%	17.42%	1.82%
Simmons First National	-24.64%	8.32%	1.16%

Summary

ServisFirst Bancshares beats Simmons First National on 11 of the 17 factors compared between the two stocks.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

About Simmons First National

Simmons First National Corporation operates as the holding company for Simmons Bank that provides banking and other financial products and services to individuals and businesses. The company offers checking, savings, and time deposits; consumer, real estate, and commercial loans; agricultural finance, equipment, and small business administration lending; trust and fiduciary services; credit cards; investment management products; treasury management; insurance products; and securities and investment services. It also provides ATM services; Internet and mobile banking platforms; overdraft facilities; and safe deposit boxes. The company was founded in 1903 and is headquartered in Pine Bluff, Arkansas.