Eagle Bancorp (NASDAQ: EGBN) and Pinnacle Financial Partners (NASDAQ:PNFP) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.

Profitability

This table compares Eagle Bancorp and Pinnacle Financial Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eagle Bancorp 32.40% 12.37% 1.54%
Pinnacle Financial Partners 27.41% 7.36% 1.18%

Institutional & Insider Ownership

67.3% of Eagle Bancorp shares are held by institutional investors. Comparatively, 72.3% of Pinnacle Financial Partners shares are held by institutional investors. 8.4% of Eagle Bancorp shares are held by insiders. Comparatively, 5.4% of Pinnacle Financial Partners shares are held by 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 Eagle Bancorp and Pinnacle Financial Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Eagle Bancorp $313.09 million 7.34 $97.70 million $3.22 20.89
Pinnacle Financial Partners $484.61 million 10.51 $127.22 million $3.23 20.29

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

Volatility and Risk

Eagle Bancorp has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Pinnacle Financial Partners has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Dividends

Pinnacle Financial Partners pays an annual dividend of $0.56 per share and has a dividend yield of 0.9%. Eagle Bancorp does not pay a dividend. Pinnacle Financial Partners pays out 17.3% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current ratings and price targets for Eagle Bancorp and Pinnacle Financial Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eagle Bancorp 0 2 3 0 2.60
Pinnacle Financial Partners 0 1 4 0 2.80

Eagle Bancorp presently has a consensus price target of $66.00, indicating a potential downside of 1.86%. Pinnacle Financial Partners has a consensus price target of $73.25, indicating a potential upside of 11.75%. Given Pinnacle Financial Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Pinnacle Financial Partners is more favorable than Eagle Bancorp.

Summary

Pinnacle Financial Partners beats Eagle Bancorp on 10 of the 16 factors compared between the two stocks.

About Eagle Bancorp

Eagle Bancorp, Inc. is a bank holding company for EagleBank (the Bank). The Bank is the Company’s principal operating subsidiary. The Bank is a chartered commercial bank. As of December 31, 2016, the Bank operated 21 banking offices: seven in Montgomery County, Maryland; five located in the District of Columbia, and nine in Northern Virginia. The Bank offers a range of commercial banking services to its business and professional clients, as well as consumer banking services to individuals living or working in the service area. The Bank also provides commercial banking services to proprietorships, businesses, partnerships, corporations, non-profit organizations and associations, and investors living and working in and near the Bank’s primary service area. The Bank offers a range of retail banking services to accommodate the individual needs of both corporate customers, as well as the community the Bank serves. It also offers online banking, mobile banking and remote deposit services.

About Pinnacle Financial Partners

Pinnacle Financial Partners, Inc. is a bank holding company. The Company operates through its subsidiary, Pinnacle Bank. The Company operates as a community bank primarily in the urban markets of Nashville, Knoxville, Memphis and Chattanooga, Tennessee and other counties. It provides the personalized service associated with small community banks, while seeking to offer the products and services, such as investments and treasury management. Pinnacle Bank offers an array of convenience-centered products and services, including round the clock telephone and Internet banking, mobile banking, debit and credit cards, direct deposit, remote deposit and cash management services for small- to medium-sized businesses. In addition, Pinnacle Bank is associated with a network of automated teller machines of other financial institutions that its clients are able to use throughout Tennessee and other regions.

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