Comparing Pathfinder Bancorp (NASDAQ:PBHC) and S&T Bancorp (NASDAQ:STBA)

Pathfinder Bancorp (NASDAQ:PBHC) and S&T Bancorp (NASDAQ:STBA) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Risk and Volatility

Pathfinder Bancorp has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Institutional and Insider Ownership

26.7% of Pathfinder Bancorp shares are owned by institutional investors. Comparatively, 65.2% of S&T Bancorp shares are owned by institutional investors. 22.4% of Pathfinder Bancorp shares are owned by company insiders. Comparatively, 1.4% of S&T Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Pathfinder Bancorp and S&T Bancorp’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pathfinder Bancorp	$72.85 million	0.97	$9.29 million	$1.42	10.56
S&T Bancorp	$535.52 million	2.94	$144.78 million	$3.53	11.67

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

Profitability

This table compares Pathfinder Bancorp and S&T Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pathfinder Bancorp	11.50%	7.47%	0.62%
S&T Bancorp	24.20%	10.63%	1.43%

Analyst Ratings

This is a breakdown of current recommendations for Pathfinder Bancorp and S&T Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pathfinder Bancorp	0	0	0	0	N/A
S&T Bancorp	0	2	0	0	2.00

S&T Bancorp has a consensus price target of $35.50, suggesting a potential downside of 13.86%. Given S&T Bancorp’s higher possible upside, analysts plainly believe S&T Bancorp is more favorable than Pathfinder Bancorp.

Dividends

Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.7%. S&T Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 3.2%. Pathfinder Bancorp pays out 28.2% of its earnings in the form of a dividend. S&T Bancorp pays out 37.4% 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. Pathfinder Bancorp has increased its dividend for 4 consecutive years and S&T Bancorp has increased its dividend for 11 consecutive years. S&T Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

S&T Bancorp beats Pathfinder Bancorp on 13 of the 15 factors compared between the two stocks.

About Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.

About S&T Bancorp

S&T Bancorp, Inc. operates as the bank holding company for S&T Bank that engages in the provision of retail and commercial banking products and services. The company operates through six segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The company accepts time and demand deposits; and offers commercial and consumer loans, cash management services, and brokerage and trust services, as well as acts as guardian and custodian of employee benefits. It also manages private investment accounts for individuals and institutions. In addition, the company distributes life insurance and long-term disability income insurance products, as well as offers title insurance agency services to commercial customers; and acts as a reinsurer of credit life, accident, and health insurance policies. S&T Bancorp, Inc. was founded in 1902 and is headquartered in Indiana, Pennsylvania.