Critical Comparison: ServisFirst Bancshares (NYSE:SFBS) & First Capital (NASDAQ:FCAP)

First Capital (NASDAQ:FCAP) and ServisFirst Bancshares (NYSE:SFBS) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, profitability, earnings, valuation, analyst recommendations, risk and institutional ownership.

Dividends

First Capital pays an annual dividend of $1.24 per share and has a dividend yield of 2.9%. ServisFirst Bancshares pays an annual dividend of $1.34 per share and has a dividend yield of 1.8%. First Capital pays out 31.5% of its earnings in the form of a dividend. ServisFirst Bancshares pays out 29.3% 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. First Capital has increased its dividend for 2 consecutive years and ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for First Capital and ServisFirst Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Capital	0	0	1	0	3.00
ServisFirst Bancshares	0	4	1	0	2.20

ServisFirst Bancshares has a consensus target price of $92.00, suggesting a potential upside of 20.17%. Given ServisFirst Bancshares’ higher probable upside, analysts clearly believe ServisFirst Bancshares is more favorable than First Capital.

Insider and Institutional Ownership

11.7% of First Capital shares are held by institutional investors. Comparatively, 67.3% of ServisFirst Bancshares shares are held by institutional investors. 4.0% of First Capital shares are held by company insiders. Comparatively, 6.7% of ServisFirst Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares First Capital and ServisFirst Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Capital	$58.13 million	2.45	$11.94 million	$3.94	10.76
ServisFirst Bancshares	$981.18 million	4.26	$227.24 million	$4.57	16.75

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

Volatility & Risk

First Capital has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, ServisFirst Bancshares has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Capital	21.45%	11.23%	1.10%
ServisFirst Bancshares	24.62%	15.47%	1.46%

Summary

ServisFirst Bancshares beats First Capital on 14 of the 16 factors compared between the two stocks.

About First Capital

First Capital, Inc. operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers. The company offers various deposit instruments, including non-interest-bearing checking accounts, negotiable order of withdrawal accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plans. It also provides residential mortgage loans, construction loans for residential and commercial properties, and commercial real estate loans, as well as commercial business loans. In addition, the company originates mortgage loans for sale in the secondary market and sells non-deposit investment products; and offers various secured or guaranteed consumer loans comprising automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans, credit cards and other personal loans, and loans secured by savings deposits, as well as unsecured consumer loans. First Capital, Inc. was founded in 1891 and is based in Corydon, Indiana.

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.