Analyzing Popular (NASDAQ:BPOP) and Provident Financial Services (NYSE:PFS)

Provident Financial Services (NYSE:PFS) and Popular (NASDAQ:BPOP) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.

Dividends

Provident Financial Services pays an annual dividend of $0.96 per share and has a dividend yield of 4.3%. Popular pays an annual dividend of $3.60 per share and has a dividend yield of 2.3%. Provident Financial Services pays out 40.0% of its earnings in the form of a dividend. Popular pays out 24.3% 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. Popular has increased its dividend for 6 consecutive years.

Earnings and Valuation

This table compares Provident Financial Services and Popular”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Provident Financial Services	$1.38 billion	2.10	$291.16 million	$2.40	9.26
Popular	$3.20 billion	3.11	$833.16 million	$14.80	10.53

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

Analyst Recommendations

This is a breakdown of current recommendations for Provident Financial Services and Popular, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Provident Financial Services	0	2	4	1	2.86
Popular	0	0	11	2	3.15

Provident Financial Services currently has a consensus target price of $26.79, indicating a potential upside of 20.53%. Popular has a consensus target price of $187.42, indicating a potential upside of 20.30%. Given Provident Financial Services’ higher possible upside, research analysts plainly believe Provident Financial Services is more favorable than Popular.

Insider & Institutional Ownership

72.0% of Provident Financial Services shares are owned by institutional investors. Comparatively, 87.3% of Popular shares are owned by institutional investors. 3.0% of Provident Financial Services shares are owned by company insiders. Comparatively, 2.1% of Popular shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Provident Financial Services has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Popular has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Provident Financial Services	22.15%	11.00%	1.24%
Popular	21.37%	15.34%	1.26%

Summary

Popular beats Provident Financial Services on 13 of the 18 factors compared between the two stocks.

About Provident Financial Services

Provident Financial Services, Inc. operates as the bank holding company for Provident Bank that provides various banking products and services to individuals, families, and businesses in the United States. Its deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA products. The company's loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, retail and industrial properties, and office buildings; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, personal loans and unsecured lines of credit, and auto and recreational vehicle loans. It also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, the company provides wealth management services comprising investment management, trust and estate administration, financial planning, and tax compliance and planning. Further, it sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure. The company was founded in 1839 and is headquartered in Jersey City, New Jersey.

About Popular

Popular, Inc., through its subsidiaries, provides various retail, mortgage, and commercial banking products and services in Puerto Rico, the United States, and the British Virgin Islands. The company provides savings, NOW, money market, and other interest-bearing demand accounts; non-interest bearing demand deposits; and certificates of deposit. It also offers commercial and industrial, commercial multi-family, commercial real estate, and residential mortgage loans; consumer loans, including personal loans, credit cards, automobile loans, home equity lines of credit, and other loans to individual borrowers; construction loans; and lease financing comprising automobile loans/leases. In addition, the company provides investment banking, auto and equipment leasing and financing, broker-dealer, and insurance services; debit cards; and online banking services. Popular, Inc. was founded in 1893 and is headquartered in Hato Rey, Puerto Rico.