Critical Contrast: ServisFirst Bancshares (NYSE:SFBS) versus Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL)

ServisFirst Bancshares (NYSE:SFBS) and Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.

Insider & Institutional Ownership

67.3% of ServisFirst Bancshares shares are owned by institutional investors. Comparatively, 21.1% of Home Federal Bancorp, Inc. of Louisiana shares are owned by institutional investors. 6.7% of ServisFirst Bancshares shares are owned by company insiders. Comparatively, 19.4% of Home Federal Bancorp, Inc. of Louisiana shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares ServisFirst Bancshares and Home Federal Bancorp, Inc. of Louisiana”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$1.02 billion	4.62	$276.60 million	$5.06	17.02
Home Federal Bancorp, Inc. of Louisiana	$32.47 million	1.79	$3.89 million	$1.68	11.22

ServisFirst Bancshares has higher revenue and earnings than Home Federal Bancorp, Inc. of Louisiana. Home Federal Bancorp, Inc. of Louisiana 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 Home Federal Bancorp, Inc. of Louisiana’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	26.95%	16.36%	1.61%
Home Federal Bancorp, Inc. of Louisiana	15.47%	9.37%	0.84%

Dividends

ServisFirst Bancshares pays an annual dividend of $1.52 per share and has a dividend yield of 1.8%. Home Federal Bancorp, Inc. of Louisiana pays an annual dividend of $0.54 per share and has a dividend yield of 2.9%. ServisFirst Bancshares pays out 30.0% of its earnings in the form of a dividend. Home Federal Bancorp, Inc. of Louisiana 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. ServisFirst Bancshares has raised its dividend for 10 consecutive years and Home Federal Bancorp, Inc. of Louisiana has raised its dividend for 11 consecutive years. Home Federal Bancorp, Inc. of Louisiana is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

ServisFirst Bancshares has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Home Federal Bancorp, Inc. of Louisiana has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for ServisFirst Bancshares and Home Federal Bancorp, Inc. of Louisiana, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	1	2	2	3.20
Home Federal Bancorp, Inc. of Louisiana	0	1	0	0	2.00

ServisFirst Bancshares presently has a consensus target price of $91.00, suggesting a potential upside of 5.64%. Given ServisFirst Bancshares’ stronger consensus rating and higher probable upside, equities research analysts clearly believe ServisFirst Bancshares is more favorable than Home Federal Bancorp, Inc. of Louisiana.

Summary

ServisFirst Bancshares beats Home Federal Bancorp, Inc. of Louisiana on 15 of the 18 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 Home Federal Bancorp, Inc. of Louisiana

Home Federal Bancorp, Inc. of Louisiana operates as the holding company for Home Federal Bank that provides various financial services to individuals, corporate entities, and other organizations. The company accepts various deposits, such as passbook savings, certificates of deposit, and demand deposit accounts. Its loan products include one-to-four family residential real estate loans; commercial real estate secured loans; multi-family residential loans; commercial business loans; land loans; construction loans; home equity and second mortgage loans; lines of credit; and consumer non-real estate loans, including loans secured by deposit accounts, automobile loans, overdrafts, and other unsecured loans. The company operates through branches in Shreveport, Bossier City, Minden, and Benton, Louisiana. The company was founded in 1924 and is based in Shreveport, Louisiana.