First Bancorp (NASDAQ:FBNC) and Fifth Third Bancorp (NASDAQ:FITB) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.
Dividends
First Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Fifth Third Bancorp pays an annual dividend of $1.08 per share and has a dividend yield of 2.8%. First Bancorp pays out 25.8% of its earnings in the form of a dividend. Fifth Third Bancorp pays out 39.0% 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. First Bancorp has raised its dividend for 1 consecutive years and Fifth Third Bancorp has raised its dividend for 4 consecutive years. Fifth Third Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares First Bancorp and Fifth Third Bancorp's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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First Bancorp | $308.70 million | 4.01 | $92.05 million | $3.10 | 14.01 |
Fifth Third Bancorp | $9.79 billion | 2.79 | $2.51 billion | $2.77 | 13.88 |
Fifth Third Bancorp has higher revenue and earnings than First Bancorp. Fifth Third Bancorp is trading at a lower price-to-earnings ratio than First Bancorp, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current recommendations and price targets for First Bancorp and Fifth Third Bancorp, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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First Bancorp | 0 | 4 | 1 | 0 | 2.20 |
Fifth Third Bancorp | 0 | 5 | 12 | 1 | 2.78 |
First Bancorp currently has a consensus target price of $25.00, indicating a potential downside of 42.45%. Fifth Third Bancorp has a consensus target price of $34.4605, indicating a potential downside of 10.35%. Given Fifth Third Bancorp's stronger consensus rating and higher possible upside, analysts clearly believe Fifth Third Bancorp is more favorable than First Bancorp.
Profitability
This table compares First Bancorp and Fifth Third Bancorp's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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First Bancorp | 24.81% | 8.36% | 1.09% |
Fifth Third Bancorp | 17.50% | 7.52% | 0.80% |
Risk and Volatility
First Bancorp has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500. Comparatively, Fifth Third Bancorp has a beta of 1.63, meaning that its stock price is 63% more volatile than the S&P 500.
Insider and Institutional Ownership
63.0% of First Bancorp shares are owned by institutional investors. Comparatively, 79.2% of Fifth Third Bancorp shares are owned by institutional investors. 2.4% of First Bancorp shares are owned by company insiders. Comparatively, 0.5% of Fifth Third Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
Fifth Third Bancorp beats First Bancorp on 11 of the 18 factors compared between the two stocks.