Contrasting Provident Financial (NASDAQ:PROV) and Banner (NASDAQ:BANR)

Banner (NASDAQ:BANR) and Provident Financial (NASDAQ:PROV) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Risk & Volatility

Banner has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500. Comparatively, Provident Financial has a beta of 0.32, indicating that its share price is 68% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Banner	22.26%	10.46%	1.21%
Provident Financial	10.97%	5.14%	0.53%

Insider and Institutional Ownership

87.3% of Banner shares are owned by institutional investors. Comparatively, 71.3% of Provident Financial shares are owned by institutional investors. 1.6% of Banner shares are owned by company insiders. Comparatively, 11.5% of Provident Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Banner and Provident Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banner	$877.77 million	2.33	$195.38 million	$5.64	10.65
Provident Financial	$60.15 million	1.72	$6.26 million	$0.99	16.35

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

Analyst Ratings

This is a summary of current ratings and target prices for Banner and Provident Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banner	0	3	4	0	2.57
Provident Financial	0	3	0	0	2.00

Banner presently has a consensus price target of $71.17, indicating a potential upside of 18.50%. Provident Financial has a consensus price target of $16.00, indicating a potential downside of 1.17%. Given Banner’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Banner is more favorable than Provident Financial.

Dividends

Banner pays an annual dividend of $2.00 per share and has a dividend yield of 3.3%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.5%. Banner pays out 35.5% of its earnings in the form of a dividend. Provident Financial pays out 56.6% 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.

Summary

Banner beats Provident Financial on 13 of the 16 factors compared between the two stocks.

About Banner

Banner Corporation operates as the bank holding company for Banner Bank that engages in the provision of commercial banking and financial products and services to individuals, businesses, and public sector entities in the United States. It accepts various deposit instruments, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, regular savings accounts, and certificates of deposit, as well as treasury management services and retirement savings plans. The company also provides commercial real estate loans, including owner-occupied, investment properties, and multifamily residential real estate loans; construction, land, and land development loans; one- to four-family residential real estate lending; commercial business loans; agricultural loans; consumer and other loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts; and small business administration loans. In addition, it provides electronic and digital banking services comprising debit cards and ATMs, internet banking, remote deposit, and mobile banking services. The company was founded in 1890 and is based in Walla Walla, Washington.

About Provident Financial

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The company's deposit products include checking, savings, and money market accounts, as well as time deposits; and loan portfolio consists of single-family, multi-family, commercial real estate, construction, mortgage, commercial business, and consumer loans. It also offers investment services comprising the sale of investment products, such as annuities and mutual funds; and trustee services for real estate transactions. The company operates through full-service banking offices in Riverside County and San Bernardino County. Provident Financial Holdings, Inc. was founded in 1956 and is headquartered in Riverside, California.