Peoples Financial Services (NASDAQ:PFIS) & SR Bancorp (NASDAQ:SRBK) Critical Survey

Peoples Financial Services (NASDAQ:PFIS) and SR Bancorp (NASDAQ:SRBK) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Analyst Ratings

This is a breakdown of current ratings for Peoples Financial Services and SR Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Financial Services	0	3	1	0	2.25
SR Bancorp	0	1	1	0	2.50

Peoples Financial Services currently has a consensus price target of $65.50, suggesting a potential downside of 4.10%. SR Bancorp has a consensus price target of $19.00, suggesting a potential upside of 2.93%. Given SR Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe SR Bancorp is more favorable than Peoples Financial Services.

Profitability

This table compares Peoples Financial Services and SR Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Financial Services	20.66%	17.27%	1.70%
SR Bancorp	6.47%	1.62%	0.26%

Insider and Institutional Ownership

31.7% of Peoples Financial Services shares are held by institutional investors. Comparatively, 24.7% of SR Bancorp shares are held by institutional investors. 8.2% of Peoples Financial Services shares are held by company insiders. Comparatively, 7.8% of SR Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Peoples Financial Services and SR Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Financial Services	$283.67 million	2.41	$59.19 million	$8.83	7.73
SR Bancorp	$51.80 million	2.89	$3.35 million	$0.45	41.02

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

Volatility and Risk

Peoples Financial Services has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, SR Bancorp has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Dividends

Peoples Financial Services pays an annual dividend of $2.50 per share and has a dividend yield of 3.7%. SR Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.3%. Peoples Financial Services pays out 28.3% of its earnings in the form of a dividend. SR Bancorp pays out 53.3% 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. Peoples Financial Services has increased its dividend for 8 consecutive years. Peoples Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Peoples Financial Services beats SR Bancorp on 12 of the 16 factors compared between the two stocks.

About Peoples Financial Services

Peoples Financial Services Corp. operates as the bank holding company for Peoples Security Bank and Trust Company that provides various commercial and retail banking services. The company accepts money market, negotiable order of withdrawal, savings, individual retirement, demand deposit, and certificates of deposit accounts. It also provides residential real estate, automobile, manufactured housing, personal, and home equity loans; and commercial real estate, working capital, construction, small business administration, and agricultural loans, as well as loans for equipment and other commercial needs, and mineral rights. In addition, the company offers fiduciary and investment services; investment management, IRA trustee, estate administration, living and life insurance trust, trustee under will, guardianship, custodial/IRA custodial, and corporate trust services, as well as pension and profit-sharing plans. Further, it provides wealth management products and services comprising investment portfolio management, estate and business succession planning, annuities, insurance, retirement plan, and tax planning, as well as education funding strategies; and securities, brokerage, and investor services. Additionally, the company offers small business checking and merchant money market accounts, online and telephone banking, business credit cards, merchant line of credit, and financial checkup services; and remote deposit capture, automatic clearing house transaction, cash management, automated teller machine, point of sale transaction, safe deposit box, night depository, direct deposit, and official check services. It serves business, non-profit, governmental, municipal agency, and professional customers, as well as retail customers. Peoples Financial Services Corp. was founded in 1905 and is headquartered in Scranton, Pennsylvania.

About SR Bancorp

SR Bancorp, Inc. operates as the holding company for Somerset Regal Bank that provides customary retail and commercial banking services to individuals, businesses, and local municipalities in the communities of Somerset, Middlesex, Hunterdon, and Essex counties in New Jersey. It offers deposit instruments, including noninterest-bearing demand deposits, interest-bearing demand accounts, savings accounts, money market accounts, and certificates of deposit. The company also provides loans comprising one- to four family-residential mortgage loans, home equity loans and lines of credit, unsecured personal loans, and rehabilitation loans; and bill payment services. In addition, it is involved in the investment activities. The company was founded in 1887 and is headquartered in Bound Brook, New Jersey.