Comparing Provident Financial (NASDAQ:PROV) & Lake Shore Bancorp (LSBK)

Lake Shore Bancorp (NASDAQ:LSBK) and Provident Financial (NASDAQ:PROV) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Valuation and Earnings

This table compares Lake Shore Bancorp and Provident Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lake Shore Bancorp $24.01 million 3.76 $4.00 million N/A N/A
Provident Financial $64.61 million 2.45 $2.13 million $0.70 30.14

Lake Shore Bancorp has higher earnings, but lower revenue than Provident Financial.

Analyst Ratings

This is a summary of recent recommendations for Lake Shore Bancorp and Provident Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lake Shore Bancorp 0 0 0 0 N/A
Provident Financial 0 1 1 0 2.50

Provident Financial has a consensus target price of $22.00, suggesting a potential upside of 4.27%. Given Provident Financial’s higher probable upside, analysts plainly believe Provident Financial is more favorable than Lake Shore Bancorp.

Volatility & Risk

Lake Shore Bancorp has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500. Comparatively, Provident Financial has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500.

Profitability

This table compares Lake Shore Bancorp and Provident Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lake Shore Bancorp 16.13% 5.01% 0.73%
Provident Financial 8.35% 4.14% 0.44%

Institutional and Insider Ownership

12.2% of Lake Shore Bancorp shares are held by institutional investors. Comparatively, 55.3% of Provident Financial shares are held by institutional investors. 4.7% of Lake Shore Bancorp shares are held by company insiders. Comparatively, 14.4% of Provident Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Lake Shore Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 3.2%. Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Provident Financial pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lake Shore Bancorp has raised its dividend for 2 consecutive years and Provident Financial has raised its dividend for 8 consecutive years.

Summary

Provident Financial beats Lake Shore Bancorp on 8 of the 15 factors compared between the two stocks.

Lake Shore Bancorp Company Profile

Lake Shore Bancorp, Inc. operates as the savings and loan holding company for Lake Shore Savings Bank that provides retail and commercial banking products and services. It accepts various deposit products, such as regular savings deposits, including Christmas Club, passbook, and statement savings accounts; money market savings and checking accounts; interest bearing and non-interest bearing checking accounts comprising demand deposits; health savings accounts; retirement accounts; time deposits; interest on lawyer accounts; and accounts for individuals, as well as commercial savings, checking, and money market accounts for businesses. The company's loan portfolio consists of one-to four-family residential mortgages, home equity loans, commercial real estate loans, construction loans, business installment loans, lines of credit, and other commercial loans; and consumer loans that include personal consumer loans, overdraft lines of credit, vehicle loans, secured and unsecured property improvement loans, and other secured and unsecured loans. As of February 08, 2018, it had 11 full-service branch locations in Western New York, including 5 locations in Chautauqua County and 6 locations in Erie County, New York. The company was founded in 1891 and is headquartered in Dunkirk, New York. Lake Shore Bancorp, Inc. is a subsidiary of Lake Shore, MHC.

Provident Financial Company Profile

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community and mortgage banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. It operates through two segments, Provident Bank and Provident Bank Mortgage. The company's deposit products include checking, savings, and money market accounts, as well as time deposits; and loan portfolio consists of single-family, multi-family, commercial real estate, construction, commercial business, consumer, and other mortgage loans. It also originates, purchases, and sells single-family mortgage loans, including second mortgages and equity lines of credit. In addition, the company offers investment services comprising the sale of investment products, such as annuities and mutual funds; and trustee services for real estate transactions. It operates through 13 full-service banking offices in Riverside County and 1 full-service banking office in San Bernardino County. The company was founded in 1956 and is based in Riverside, California.

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