International Bancshares (NASDAQ: IBOC) and Provident Financial (NASDAQ:PROV) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.

Dividends

International Bancshares pays an annual dividend of $0.66 per share and has a dividend yield of 1.7%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. International Bancshares pays out 29.9% of its earnings in the form of a dividend. Provident Financial pays out 136.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

International Bancshares has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, Provident Financial has a beta of -0.01, meaning that its share price is 101% less volatile than the S&P 500.

Valuation & Earnings

This table compares International Bancshares and Provident Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
International Bancshares $549.62 million 4.79 $133.93 million $2.21 18.03
Provident Financial $73.24 million 1.95 $5.20 million $0.41 45.83

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

Profitability

This table compares International Bancshares and Provident Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
International Bancshares 26.36% 8.34% 1.23%
Provident Financial 4.82% 3.84% 0.41%

Insider and Institutional Ownership

57.0% of International Bancshares shares are held by institutional investors. Comparatively, 60.2% of Provident Financial shares are held by institutional investors. 17.9% of International Bancshares shares are held by company insiders. Comparatively, 12.7% of Provident Financial shares are held 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.

Analyst Ratings

This is a summary of recent ratings and target prices for International Bancshares and Provident Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
International Bancshares 0 0 0 0 N/A
Provident Financial 0 1 0 0 2.00

Provident Financial has a consensus price target of $20.00, suggesting a potential upside of 6.44%. Given Provident Financial’s higher possible upside, analysts clearly believe Provident Financial is more favorable than International Bancshares.

Summary

International Bancshares beats Provident Financial on 10 of the 14 factors compared between the two stocks.

International Bancshares Company Profile

International Bancshares Corporation is a financial holding company. The Company, through its subsidiaries, is primarily engaged in the business of banking, including the acceptance of checking and savings deposits, and the making of commercial, real estate, personal, home improvement, automobile, and other installment and term loans. The primary markets of the Company are South, Central and Southeast Texas, an area bordered on the east by the Galveston area, to the northwest by Round Rock, to the southwest by Del Rio and to the southeast by Brownsville, as well as the State of Oklahoma. Its banking subsidiaries facilitate international trade along the United States’ border with Mexico and elsewhere. The Bank’s subsidiaries primarily focus on providing commercial banking services to small and medium sized businesses located in their trade areas. The Company’s bank subsidiaries include International Bank of Commerce (IBC); Commerce Bank, and International Bank of Commerce, Zapata.

Provident Financial Company Profile

Provident Financial Holdings, Inc. is the holding company of Provident Savings Bank, F.S.B. (the Bank). The Bank is a federally chartered stock savings bank. The Company operates through two segments: Provident Bank and Provident Bank Mortgage (PBM). The Bank’s operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s full service offices and investing those funds in single-family loans, multi-family loans, commercial real estate loans, construction loans, commercial business loans, consumer loans and other mortgage loans. PBM operations primarily consist of the origination, purchase and sale of mortgage loans secured by single-family residences. The Bank is a financial services company committed to serving consumers and small to mid-sized businesses in the Inland Empire region of Southern California. The Bank offers business checking accounts, other business banking services and services loans for others.

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