Comparing Prosperity Bancshares (NYSE:PB) and Sierra Bancorp (NASDAQ:BSRR)

Sierra Bancorp (NASDAQ:BSRR) and Prosperity Bancshares (NYSE:PB) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.

Profitability

This table compares Sierra Bancorp and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	19.90%	11.55%	1.11%
Prosperity Bancshares	26.79%	6.64%	1.22%

Dividends

Sierra Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. Prosperity Bancshares pays an annual dividend of $2.32 per share and has a dividend yield of 2.9%. Sierra Bancorp pays out 35.6% of its earnings in the form of a dividend. Prosperity Bancshares pays out 45.8% 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. Prosperity Bancshares has increased its dividend for 23 consecutive years. Sierra Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Sierra Bancorp has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Insider and Institutional Ownership

55.4% of Sierra Bancorp shares are held by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are held by institutional investors. 11.6% of Sierra Bancorp shares are held by company insiders. Comparatively, 4.3% of Prosperity 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.

Earnings and Valuation

This table compares Sierra Bancorp and Prosperity Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sierra Bancorp	$203.87 million	2.20	$40.56 million	$2.81	11.09
Prosperity Bancshares	$1.15 billion	6.65	$479.39 million	$5.06	15.80

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

Analyst Ratings

This is a summary of current ratings and price targets for Sierra Bancorp and Prosperity Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	2	0	0	2.00
Prosperity Bancshares	0	6	8	0	2.57

Sierra Bancorp currently has a consensus price target of $29.00, suggesting a potential downside of 6.90%. Prosperity Bancshares has a consensus price target of $82.88, suggesting a potential upside of 3.66%. Given Prosperity Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe Prosperity Bancshares is more favorable than Sierra Bancorp.

Summary

Prosperity Bancshares beats Sierra Bancorp on 13 of the 17 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.