Critical Survey: U.S. Bancorp (NYSE:USB) & First Bancshares (NYSE:FBMS)

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U.S. Bancorp (NYSE:USB) and First Bancshares (NASDAQ:FBMS) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Risk & Volatility

U.S. Bancorp has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, First Bancshares has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for U.S. Bancorp and First Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
U.S. Bancorp 3 8 3 0 2.00
First Bancshares 0 1 1 0 2.50

U.S. Bancorp currently has a consensus target price of $56.77, suggesting a potential downside of 5.43%. First Bancshares has a consensus target price of $35.00, suggesting a potential upside of 4.29%. Given First Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe First Bancshares is more favorable than U.S. Bancorp.

Insider & Institutional Ownership

75.1% of U.S. Bancorp shares are held by institutional investors. Comparatively, 58.2% of First Bancshares shares are held by institutional investors. 0.2% of U.S. Bancorp shares are held by company insiders. Comparatively, 4.3% of First Bancshares 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.

Profitability

This table compares U.S. Bancorp and First Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
U.S. Bancorp 26.54% 15.39% 1.51%
First Bancshares 23.57% 10.03% 1.31%

Valuation & Earnings

This table compares U.S. Bancorp and First Bancshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
U.S. Bancorp $25.78 billion 3.64 $7.10 billion $4.10 14.64
First Bancshares $120.54 million 5.24 $21.23 million $2.29 14.66

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

Dividends

U.S. Bancorp pays an annual dividend of $1.68 per share and has a dividend yield of 2.8%. First Bancshares pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. U.S. Bancorp pays out 41.0% of its earnings in the form of a dividend. First Bancshares pays out 14.0% 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.

Summary

U.S. Bancorp beats First Bancshares on 10 of the 16 factors compared between the two stocks.

U.S. Bancorp Company Profile

U.S. Bancorp, a financial services holding company, provides various financial services in the United States. It operates in five segments: Corporate and Commercial Banking, Consumer and Business Banking, Wealth Management and Investment Services, Payment Services, and Treasury and Corporate Support. The company offers depository services, including checking accounts, savings accounts, and time certificate contracts; and lending services, such as traditional credit products, as well as credit card services, lease financing and import/export trade, asset-backed lending, agricultural finance, and other products. It also provides ancillary services comprising capital markets, treasury management, and receivable lock-box collection services to corporate customers; and a range of asset management and fiduciary services for individuals, estates, foundations, business corporations, and charitable organizations. In addition, the company offers investment and insurance products to its customers principally within its markets, as well as fund administration services to a range of mutual and other funds. Further, it provides corporate and purchasing card, and corporate trust services; and merchant processing services, as well as cash and investment management, ATM processing, mortgage banking, and brokerage and leasing services. The company offers its products and services through operating a network of 3,018 banking offices principally operating in the Midwest and West regions of the United States, as well as through online services and over mobile devices. It also operates a network of 4,681 ATMs. The company was founded in 1863 and is headquartered in Minneapolis, Minnesota.

First Bancshares Company Profile

The First Bancshares, Inc. operates as the bank holding company for The First, A National Banking Association that provides general commercial and retail banking services. The company operates through three segments: Commercial/Retail Bank, Mortgage Banking Division, and Holding Company. It offers deposit services, including checking, NOW, and savings accounts; other time deposits, such as daily money market accounts and longer-term certificates of deposit; and individual retirement accounts. The company also provides commercial loans comprising secured and unsecured loans for working capital, business expansion, and purchase of equipment and machinery; consumer loans consisting of equity lines of credit, as well as secured and unsecured loans for financing automobiles, home improvements, education, and personal investments; and real estate construction and acquisition loans. In addition, it originates loans to purchase existing residential homes or construct new homes, and to refinance existing mortgages; and provides financial and wealth management services. Further, the company offers Internet banking services, automated teller machines, voice response telephone inquiry services, commercial sweep accounts, cash management services, safe deposit boxes, merchant, mobile deposit, direct deposit of payroll and social security checks, automatic drafts for various accounts, and credit card services. It primarily serves small to medium-sized businesses, professional concerns, individuals, associations and organizations, and governmental authorities. As of December 31, 2018, the company operated through a network of 61 full-service branches, 1 motor branch, and 4 loan production offices in Mississippi, Alabama, Louisiana, Florida, and Georgia. The First Bancshares, Inc. was incorporated in 1995 and is headquartered in Hattiesburg, Mississippi.

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