ServisFirst Bancshares (NYSE:SFBS) and Suruga Bank (OTCMKTS:SUGBY) Head-To-Head Review

ServisFirst Bancshares (NYSE:SFBS) and Suruga Bank (OTCMKTS:SUGBY) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

67.3% of ServisFirst Bancshares shares are held by institutional investors. 6.7% of ServisFirst Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares ServisFirst Bancshares and Suruga Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$981.18 million	4.98	$227.24 million	$4.57	19.56
Suruga Bank	$598.19 million	2.64	$133.17 million	$6.79	11.78

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

Profitability

This table compares ServisFirst Bancshares and Suruga Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	24.62%	15.47%	1.46%
Suruga Bank	19.87%	7.07%	0.61%

Dividends

ServisFirst Bancshares pays an annual dividend of $1.34 per share and has a dividend yield of 1.5%. Suruga Bank pays an annual dividend of $1.70 per share and has a dividend yield of 2.1%. ServisFirst Bancshares pays out 29.3% of its earnings in the form of a dividend. Suruga Bank pays out 25.0% 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. ServisFirst Bancshares has increased its dividend for 10 consecutive years. Suruga Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

ServisFirst Bancshares has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Suruga Bank has a beta of -0.07, suggesting that its share price is 107% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for ServisFirst Bancshares and Suruga Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	2	0	0	2.00
Suruga Bank	0	0	0	0	0.00

ServisFirst Bancshares currently has a consensus target price of $90.50, suggesting a potential upside of 1.25%. Given ServisFirst Bancshares’ stronger consensus rating and higher possible upside, research analysts clearly believe ServisFirst Bancshares is more favorable than Suruga Bank.

Summary

ServisFirst Bancshares beats Suruga Bank on 13 of the 16 factors compared between the two stocks.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

About Suruga Bank

Suruga Bank Ltd. provides various banking and financial products and services to individuals and corporate customers in Japan. The company offers deposit products, such as time, ordinary, savings, foreign currency, and other deposits, as well as current and general accounts; card, housing, second house, startup, and business up term loans, as well as loans by purpose; credit and debit cards; overdrafts; and other financing products. It also provides investment trust, public bond, pension contribution, insurance, inheritance/trust, lottery, foreign currency, pay-easy, web direct, safe deposit box, external linkage, foreign remittance, fund management, e-combination, payment, nursing care/medical care/dispensing compensation receivable factoring, mortgage, and Internet and telephone banking services. In addition, the company offers staffing, money lending, guarantee, printing, leasing, and agency services. The company was incorporated in 1895 and is headquartered in Numazu, Japan.