Critical Analysis: Peoples Bancorp of North Carolina (NASDAQ:PEBK) versus OceanFirst Financial (NASDAQ:OCFC)

OceanFirst Financial (NASDAQ:OCFC) and Peoples Bancorp of North Carolina (NASDAQ:PEBK) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for OceanFirst Financial and Peoples Bancorp of North Carolina, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OceanFirst Financial	0	5	1	0	2.17
Peoples Bancorp of North Carolina	0	0	1	0	3.00

OceanFirst Financial currently has a consensus price target of $21.50, suggesting a potential upside of 27.56%. Given OceanFirst Financial’s higher possible upside, equities analysts plainly believe OceanFirst Financial is more favorable than Peoples Bancorp of North Carolina.

Profitability

This table compares OceanFirst Financial and Peoples Bancorp of North Carolina’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OceanFirst Financial	6.38%	5.34%	0.59%
Peoples Bancorp of North Carolina	17.25%	12.75%	1.15%

Valuation and Earnings

This table compares OceanFirst Financial and Peoples Bancorp of North Carolina”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OceanFirst Financial	$687.16 million	2.37	$70.98 million	$0.85	19.83
Peoples Bancorp of North Carolina	$114.60 million	2.10	$19.83 million	$3.64	12.09

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

Dividends

OceanFirst Financial pays an annual dividend of $0.80 per share and has a dividend yield of 4.7%. Peoples Bancorp of North Carolina pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. OceanFirst Financial pays out 94.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Peoples Bancorp of North Carolina pays out 23.1% of its earnings in the form of a dividend. Peoples Bancorp of North Carolina has raised its dividend for 1 consecutive years.

Risk and Volatility

OceanFirst Financial has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Peoples Bancorp of North Carolina has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Institutional and Insider Ownership

71.0% of OceanFirst Financial shares are owned by institutional investors. Comparatively, 43.8% of Peoples Bancorp of North Carolina shares are owned by institutional investors. 5.4% of OceanFirst Financial shares are owned by insiders. Comparatively, 14.5% of Peoples Bancorp of North Carolina shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

About OceanFirst Financial

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.

About Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina, Inc. operates as the bank holding company for Peoples Bank that provides various banking products and services for individuals and small-to medium-sized businesses. It offers checking, savings, money market, and retirement accounts; certificates of deposits; and credit and debit cards. The company also originates commercial real estate loans, commercial loans, construction and land development loans, and residential mortgage loans; and individual taxpayer identification number mortgage loans, as well as agricultural loans. In addition, it provides investment counseling and non-deposit investment products, such as stocks, bonds, mutual funds, tax deferred annuities, and related brokerage services; and real estate appraisal and brokerage services. Further, the company operates as a clearing-house for the provision of appraisal services for community banks; and acquires, manages, and disposes real property, other collateral, and other assets obtained in the ordinary course of collecting debts. Peoples Bancorp of North Carolina, Inc. was founded in 1912 and is headquartered in Newton, North Carolina.