Reviewing FB Financial (NYSE:FBK) and Security Federal (OTCMKTS:SFDL)

Security Federal (OTCMKTS:SFDL) and FB Financial (NYSE:FBK) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Valuation & Earnings

This table compares Security Federal and FB Financial’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Security Federal	$74.37 million	1.19	$10.19 million	$2.86	9.62
FB Financial	$748.95 million	2.85	$120.22 million	$2.38	19.08

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

Volatility & Risk

Security Federal has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, FB Financial has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Security Federal and FB Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Security Federal	0	0	0	0	N/A
FB Financial	1	2	3	0	2.33

FB Financial has a consensus target price of $42.33, indicating a potential downside of 6.75%. Given FB Financial’s higher possible upside, analysts clearly believe FB Financial is more favorable than Security Federal.

Profitability

This table compares Security Federal and FB Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Security Federal	11.78%	11.10%	0.64%
FB Financial	15.34%	10.24%	1.19%

Dividends

Security Federal pays an annual dividend of $0.56 per share and has a dividend yield of 2.0%. FB Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.5%. Security Federal pays out 19.6% of its earnings in the form of a dividend. FB Financial pays out 28.6% 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. Security Federal is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

65.4% of FB Financial shares are held by institutional investors. 35.9% of Security Federal shares are held by company insiders. Comparatively, 1.7% of FB Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

FB Financial beats Security Federal on 10 of the 15 factors compared between the two stocks.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.

About FB Financial

FB Financial Corporation operates as a bank holding company for FirstBank that provides a suite of commercial and consumer banking services to businesses, professionals, and individuals. The company operates in segments, such as Banking and Mortgage. It offers checking, demand, money market, and savings accounts; deposit and lending products and services to corporate, commercial, and consumer customers; and time deposits and certificates of deposits, as well as residential mortgage loans. The company also provides owner-occupied and non-owner-occupied real estate commercial, residential real estate 1-4 family mortgage, multi-family residential, commercial and industrial, construction, land acquisition, residential lines of credit, and land development loans; and consumer and other loans, such as car, boat, and other recreational vehicle loans, as well as manufactured homes without real estate and personal lines of credit. In addition, the company offers mortgage banking services through its bank branch network and mortgage banking offices in the southeastern United States; direct-to-consumer internet delivery channel; and trust, insurance, and investment services, as well as online and mobile banking services. The company operates full-service bank branches and limited-service branches locations throughout Tennessee, Nashville, Chattanooga, Knoxville, Memphis, Jackson, Birmingham, Florence, Huntsville, Alabama, Bowling Green, and Kentucky; and mortgage offices throughout the southeastern United States. The company was formerly known as First South Bancorp, Inc. and changed its name to FB Financial Corporation in 2016. FB Financial Corporation was founded in 1906 and is headquartered in Nashville, Tennessee.