Contrasting ServisFirst Bancshares (NYSE:SFBS) and Broadway Financial (NASDAQ:BYFC)

ServisFirst Bancshares (NYSE:SFBS) and Broadway Financial (NASDAQ:BYFC) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Profitability

This table compares ServisFirst Bancshares and Broadway Financial’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%
Broadway Financial	3.18%	1.46%	0.15%

Valuation & Earnings

This table compares ServisFirst Bancshares and Broadway Financial”s 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	4.68	$227.24 million	$4.57	18.41
Broadway Financial	$63.76 million	1.06	$1.93 million	($0.13)	-56.38

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

Volatility and Risk

ServisFirst Bancshares has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500. Comparatively, Broadway Financial has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Institutional and Insider Ownership

67.3% of ServisFirst Bancshares shares are owned by institutional investors. Comparatively, 12.1% of Broadway Financial shares are owned by institutional investors. 6.7% of ServisFirst Bancshares shares are owned by insiders. Comparatively, 4.1% of Broadway Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for ServisFirst Bancshares and Broadway Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	2	0	0	2.00
Broadway Financial	0	0	0	0	0.00

ServisFirst Bancshares currently has a consensus price target of $90.50, suggesting a potential upside of 7.57%. Given ServisFirst Bancshares’ stronger consensus rating and higher possible upside, equities analysts clearly believe ServisFirst Bancshares is more favorable than Broadway Financial.

Summary

ServisFirst Bancshares beats Broadway Financial on 13 of the 13 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 Broadway Financial

Broadway Financial Corporation operates as the holding company for City First Bank, National Association that provides various banking products and services in the United States. It accepts various deposit accounts, including savings accounts, checking accounts, interest checking accounts, money market accounts, and fixed-term certificates of deposit. The company also offers mortgage loans, which are secured by multi-family residential properties; single family residential properties; and commercial real estate, including charter schools, community facilities, and churches, as well as commercial business, construction, and consumer loans. In addition, it invests in securities issued by federal government agencies, residential mortgage-backed securities, and other investments. The company was founded in 1946 and is headquartered in Los Angeles, California.