Head to Head Review: Carter Bankshares (NASDAQ:CARE) and Provident Financial (NASDAQ:PROV)

Provident Financial (NASDAQ:PROV) and Carter Bankshares (NASDAQ:CARE) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.

Dividends

Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.1%. Carter Bankshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Provident Financial pays out 54.4% of its earnings in the form of a dividend. Carter Bankshares pays out 6.9% 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.

Insider and Institutional Ownership

71.3% of Provident Financial shares are held by institutional investors. Comparatively, 41.5% of Carter Bankshares shares are held by institutional investors. 10.9% of Provident Financial shares are held by company insiders. Comparatively, 2.4% of Carter Bankshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Provident Financial	$59.62 million	1.89	$6.66 million	$1.03	17.67
Carter Bankshares	$254.63 million	2.66	$31.00 million	$5.81	5.26

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

Volatility and Risk

Provident Financial has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500. Comparatively, Carter Bankshares has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Profitability

This table compares Provident Financial and Carter Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Provident Financial	11.16%	5.23%	0.54%
Carter Bankshares	36.79%	7.46%	0.73%

Analyst Recommendations

This is a breakdown of recent ratings for Provident Financial and Carter Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Provident Financial	0	2	0	1	2.67
Carter Bankshares	0	4	1	0	2.20

Provident Financial currently has a consensus target price of $18.00, indicating a potential downside of 1.10%. Carter Bankshares has a consensus target price of $30.75, indicating a potential upside of 0.59%. Given Carter Bankshares’ higher possible upside, analysts plainly believe Carter Bankshares is more favorable than Provident Financial.

Summary

Carter Bankshares beats Provident Financial on 12 of the 17 factors compared between the two stocks.

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.

About Carter Bankshares

Carter Bankshares, Inc. operates as the bank holding company for Carter Bank & Trust that provides various banking products and services in the United States. It accepts various deposit products, including checking, savings, retirement, and money market accounts, as well as certificates of deposits. The company also offers commercial loans comprising secured and unsecured loans; consumer loans, such as secured and unsecured loans for financing automobiles, home improvements, education, overdraft protection, and personal investments, as well as residential mortgages; real estate construction, acquisition, commercial, and industrial loans; home equity lines of credit; and credit cards, as well as originates and holds fixed and variable rate mortgage loans. In addition, it provides other banking services that include safe deposit boxes, direct deposit of payroll, and social security checks; online banking products, including online and mobile banking, online account opening, bill pay, e-statement, mobile deposit, digital wallet, and ATM services; title insurance and other financial institution-related products and services; and treasury and corporate cash management services. Carter Bankshares, Inc. was founded in 1974 and is headquartered in Martinsville, Virginia.