Financial Analysis: City (NASDAQ:CHCO) versus Peoples Financial (OTCMKTS:PFBX)

City (NASDAQ:CHCO) and Peoples Financial (OTCMKTS:PFBX) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Profitability

This table compares City and Peoples Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City	31.35%	16.30%	1.87%
Peoples Financial	53.23%	20.84%	2.33%

Insider and Institutional Ownership

72.4% of City shares are held by institutional investors. Comparatively, 32.8% of Peoples Financial shares are held by institutional investors. 1.9% of City shares are held by company insiders. Comparatively, 28.1% of Peoples Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

City has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Peoples Financial has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for City and Peoples Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	4	0	0	2.00
Peoples Financial	0	0	0	0	0.00

City presently has a consensus target price of $133.25, suggesting a potential upside of 10.76%. Given City’s stronger consensus rating and higher probable upside, equities research analysts plainly believe City is more favorable than Peoples Financial.

Dividends

City pays an annual dividend of $3.16 per share and has a dividend yield of 2.6%. Peoples Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.8%. City pays out 38.0% of its earnings in the form of a dividend. Peoples Financial pays out 8.6% 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. City has increased its dividend for 6 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares City and Peoples Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$379.76 million	4.59	$117.10 million	$8.31	14.48
Peoples Financial	$40.11 million	2.28	$21.70 million	$4.19	4.73

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

Summary

City beats Peoples Financial on 11 of the 16 factors compared between the two stocks.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

About Peoples Financial

Peoples Financial Corporation operates as the bank holding company for The Peoples Bank that provides banking, financial, and trust services to government entities, individuals, and small and commercial businesses in Mississippi. The company accepts various deposits, such as interest and non-interest-bearing checking accounts, savings accounts, certificates of deposit, and individual retirement accounts (IRAs). It offers business, commercial, real estate, construction, personal, and installment loans; and personal trust, agencies, and estate services, including living and testamentary trusts, executorships, guardianships, and conservatorships. In addition, the company provides self-directed IRAs; and escrow management, stock transfer, and bond paying agency accounts to corporate customers. Further, it offers other services consisting of safe deposit box rental, wire transfer, night drop facilities, collection, cash management, and Internet banking services. the company provides services to customers of various industries, such as seafood, retail, hospitality, hotel/motel, gaming, and construction. Peoples Financial Corporation was founded in 1896 and is headquartered in Biloxi, Mississippi.