First Commonwealth Financial (NYSE:FCF) versus Lake Shore Bancorp (NASDAQ:LSBK) Head-To-Head Contrast

First Commonwealth Financial (NYSE:FCF) and Lake Shore Bancorp (NASDAQ:LSBK) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.

Dividends

First Commonwealth Financial pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. First Commonwealth Financial pays out 33.1% of its earnings in the form of a dividend. Lake Shore Bancorp pays out 32.1% 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. First Commonwealth Financial has increased its dividend for 9 consecutive years. First Commonwealth Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

First Commonwealth Financial has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Valuation and Earnings

This table compares First Commonwealth Financial and Lake Shore Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Commonwealth Financial	$729.51 million	2.77	$152.30 million	$1.69	12.36
Lake Shore Bancorp	$39.56 million	3.67	$7.27 million	$1.12	16.81

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

Insider and Institutional Ownership

72.6% of First Commonwealth Financial shares are owned by institutional investors. Comparatively, 8.7% of Lake Shore Bancorp shares are owned by institutional investors. 1.9% of First Commonwealth Financial shares are owned by company insiders. Comparatively, 8.4% of Lake Shore Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares First Commonwealth Financial and Lake Shore Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Commonwealth Financial	23.06%	11.17%	1.40%
Lake Shore Bancorp	20.62%	5.84%	1.15%

Analyst Recommendations

This is a summary of current ratings and price targets for First Commonwealth Financial and Lake Shore Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Commonwealth Financial	0	2	4	0	2.67
Lake Shore Bancorp	0	0	0	1	4.00

First Commonwealth Financial currently has a consensus target price of $24.00, suggesting a potential upside of 14.92%. Given First Commonwealth Financial’s higher probable upside, analysts clearly believe First Commonwealth Financial is more favorable than Lake Shore Bancorp.

Summary

First Commonwealth Financial beats Lake Shore Bancorp on 12 of the 18 factors compared between the two stocks.

About First Commonwealth Financial

First Commonwealth Financial Corporation is a bank holding company headquartered in Indiana, Pennsylvania. Through its subsidiary, First Commonwealth Bank, the company provides banking and financial services to individuals, businesses and organizations. Its services include consumer and commercial banking, lending, deposit accounts, cash management, wealth management and trust services. The company also offers insurance and other financial services through affiliated businesses. First Commonwealth serves communities in Pennsylvania and Ohio, with a network of branches and other banking locations across those states.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. is the bank holding company for Lake Shore Savings Bank, a community bank headquartered in Dunkirk, New York. The bank traces its history to 1891 and serves customers in western New York, including Chautauqua and Erie counties. Lake Shore Savings Bank offers deposit accounts and lending services to individuals, families and businesses. Its products include checking and savings accounts, certificates of deposit, residential mortgages, commercial real estate loans and consumer loans.