Head-To-Head Review: TFS Financial (NASDAQ:TFSL) vs. ServisFirst Bancshares (NYSE:SFBS)

TFS Financial (NASDAQ:TFSL) and ServisFirst Bancshares (NYSE:SFBS) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Dividends

TFS Financial pays an annual dividend of $1.13 per share and has a dividend yield of 8.2%. ServisFirst Bancshares pays an annual dividend of $1.52 per share and has a dividend yield of 2.0%. TFS Financial pays out 353.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ServisFirst Bancshares pays out 30.0% of its earnings in the form of a dividend. ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Earnings and Valuation

This table compares TFS Financial and ServisFirst Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TFS Financial	$791.96 million	4.86	$90.96 million	$0.32	42.88
ServisFirst Bancshares	$555.79 million	7.34	$276.60 million	$5.06	14.76

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

Insider & Institutional Ownership

9.8% of TFS Financial shares are held by institutional investors. Comparatively, 67.3% of ServisFirst Bancshares shares are held by institutional investors. 0.7% of TFS Financial shares are held by company insiders. Comparatively, 6.7% of ServisFirst Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for TFS Financial and ServisFirst Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TFS Financial	0	2	1	0	2.33
ServisFirst Bancshares	0	1	2	2	3.20

TFS Financial presently has a consensus target price of $15.00, indicating a potential upside of 9.33%. ServisFirst Bancshares has a consensus target price of $93.67, indicating a potential upside of 25.41%. Given ServisFirst Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe ServisFirst Bancshares is more favorable than TFS Financial.

Profitability

This table compares TFS Financial and ServisFirst Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TFS Financial	11.29%	4.79%	0.52%
ServisFirst Bancshares	26.95%	16.36%	1.61%

Volatility and Risk

TFS Financial has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, ServisFirst Bancshares has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Summary

ServisFirst Bancshares beats TFS Financial on 15 of the 18 factors compared between the two stocks.

About TFS Financial

TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.

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.