Sierra Bancorp (NASDAQ:BSRR) vs. Prosperity Bancshares (NYSE:PB) Critical Analysis

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

Risk and Volatility

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

Profitability

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

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

Institutional & Insider Ownership

80.7% of Prosperity Bancshares shares are owned by institutional investors. Comparatively, 55.4% of Sierra Bancorp shares are owned by institutional investors. 4.3% of Prosperity Bancshares shares are owned by insiders. Comparatively, 11.6% of Sierra Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Prosperity Bancshares and Sierra Bancorp, as reported by MarketBeat.

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

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

Earnings & Valuation

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

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

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.

Dividends

Prosperity Bancshares pays an annual dividend of $2.32 per share and has a dividend yield of 2.9%. Sierra Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. Prosperity Bancshares pays out 45.8% of its earnings in the form of a dividend. Sierra Bancorp pays out 35.6% 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. 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.

Summary

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

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.

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.