Contrasting Financial Institutions (NASDAQ:FISI) and OceanFirst Financial (NASDAQ:OCFC)

Financial Institutions (NASDAQ:FISIGet Free Report) and OceanFirst Financial (NASDAQ:OCFCGet Free Report) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, valuation and profitability.

Profitability

This table compares Financial Institutions and OceanFirst Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Financial Institutions 11.53% 9.66% 0.65%
OceanFirst Financial 15.54% 6.17% 0.75%

Analyst Ratings

This is a summary of recent recommendations for Financial Institutions and OceanFirst Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Financial Institutions 0 3 0 0 2.00
OceanFirst Financial 0 3 2 0 2.40

Financial Institutions presently has a consensus target price of $20.67, suggesting a potential upside of 14.24%. OceanFirst Financial has a consensus target price of $18.20, suggesting a potential upside of 21.58%. Given OceanFirst Financial’s stronger consensus rating and higher possible upside, analysts clearly believe OceanFirst Financial is more favorable than Financial Institutions.

Earnings & Valuation

This table compares Financial Institutions and OceanFirst Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Financial Institutions $334.38 million 0.84 $50.26 million $2.51 7.21
OceanFirst Financial $641.60 million 1.37 $104.03 million $1.71 8.75

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

Insider and Institutional Ownership

60.5% of Financial Institutions shares are owned by institutional investors. Comparatively, 71.0% of OceanFirst Financial shares are owned by institutional investors. 2.7% of Financial Institutions shares are owned by company insiders. Comparatively, 5.0% of OceanFirst Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Financial Institutions has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, OceanFirst Financial has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Dividends

Financial Institutions pays an annual dividend of $1.20 per share and has a dividend yield of 6.6%. OceanFirst Financial pays an annual dividend of $0.80 per share and has a dividend yield of 5.3%. Financial Institutions pays out 47.8% of its earnings in the form of a dividend. OceanFirst Financial pays out 46.8% 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. Financial Institutions has raised its dividend for 13 consecutive years and OceanFirst Financial has raised its dividend for 2 consecutive years. Financial Institutions is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

OceanFirst Financial beats Financial Institutions on 13 of the 17 factors compared between the two stocks.

About Financial Institutions

(Get Free Report)

Financial Institutions, Inc. operates as a holding company for the Five Star Bank, a chartered bank that provides banking and financial services to individuals, municipalities, and businesses in New York. The company provides checking and savings account programs, including money market accounts, certificates of deposit, sweep investments, and individual retirement and other qualified plan accounts, as well as NOW accounts. Its loan products include term loans and lines of credit; short and medium-term commercial loans for working capital, business expansion, and purchase of equipment; commercial business loans to the agricultural industry; commercial mortgage loans; one-to-four family residential mortgage loans, home improvement loans, closed-end home equity loans, and home equity lines of credit; and consumer loans, such as automobile, secured installment, and personal loans. The company offers personal insurance products, including automobile, homeowners, boat, recreational vehicle, landlord, and umbrella coverage; commercial insurance comprising property, liability, automobile, inland marine, workers compensation, bonds, crop, and umbrella insurance products; and financial services, such as life and disability insurance, medicare supplements, long-term care, annuities, mutual funds, and retirement programs. In addition, it offers customized investment advisory, wealth management, investment consulting, and retirement plan services, as well as operates a real estate investment trust that holds residential mortgages and commercial real estate loans. Financial Institutions, Inc. was founded in 1817 and is headquartered in Warsaw, New York.

About OceanFirst Financial

(Get Free Report)

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.

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