Head to Head Review: Provident Financial (NASDAQ:PROV) and Northeast Bancorp (NASDAQ:NBN)

Northeast Bancorp (NASDAQ:NBN) and Provident Financial (NASDAQ:PROV) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Analyst Recommendations

This is a breakdown of recent recommendations for Northeast Bancorp and Provident Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Bancorp	0	1	2	0	2.67
Provident Financial	0	3	0	0	2.00

Northeast Bancorp currently has a consensus target price of $130.50, suggesting a potential upside of 0.97%. Provident Financial has a consensus target price of $17.00, suggesting a potential downside of 1.28%. Given Northeast Bancorp’s stronger consensus rating and higher possible upside, equities analysts clearly believe Northeast Bancorp is more favorable than Provident Financial.

Insider and Institutional Ownership

71.3% of Provident Financial shares are owned by institutional investors. 14.2% of Northeast Bancorp shares are owned by insiders. Comparatively, 11.5% of Provident Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Northeast Bancorp and Provident Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Bancorp	$351.00 million	3.02	$83.44 million	$11.67	11.07
Provident Financial	$60.15 million	1.79	$6.26 million	$0.92	18.72

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

Risk & Volatility

Northeast Bancorp has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Provident Financial has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Dividends

Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.3%. Northeast Bancorp pays out 0.3% of its earnings in the form of a dividend. Provident Financial pays out 60.9% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northeast Bancorp	25.96%	18.63%	2.13%
Provident Financial	10.27%	4.77%	0.50%

Summary

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

About Northeast Bancorp

Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.

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.