Contrasting SmartFinancial (NASDAQ:SMBK) & Pacific Mercantile Bancorp (NASDAQ:PMBC)

SmartFinancial (NASDAQ:SMBK) and Pacific Mercantile Bancorp (NASDAQ:PMBC) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, dividends, risk, analyst recommendations and earnings.

Earnings and Valuation

This table compares SmartFinancial and Pacific Mercantile Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SmartFinancial $98.76 million 2.93 $18.10 million $1.55 13.37
Pacific Mercantile Bancorp $67.18 million 2.36 $27.34 million N/A N/A

Pacific Mercantile Bancorp has lower revenue, but higher earnings than SmartFinancial.

Institutional and Insider Ownership

40.4% of SmartFinancial shares are owned by institutional investors. Comparatively, 69.5% of Pacific Mercantile Bancorp shares are owned by institutional investors. 9.8% of SmartFinancial shares are owned by insiders. Comparatively, 12.3% of Pacific Mercantile Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for SmartFinancial and Pacific Mercantile Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SmartFinancial 0 2 2 0 2.50
Pacific Mercantile Bancorp 0 1 0 0 2.00

Pacific Mercantile Bancorp has a consensus price target of $9.00, suggesting a potential upside of 25.35%. Given Pacific Mercantile Bancorp’s higher possible upside, analysts plainly believe Pacific Mercantile Bancorp is more favorable than SmartFinancial.

Risk & Volatility

SmartFinancial has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Pacific Mercantile Bancorp has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.

Profitability

This table compares SmartFinancial and Pacific Mercantile Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SmartFinancial 21.46% 7.91% 0.98%
Pacific Mercantile Bancorp 17.07% 8.78% 0.87%

Summary

SmartFinancial beats Pacific Mercantile Bancorp on 7 of the 13 factors compared between the two stocks.

About SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, Florida, and Georgia. The company offers various deposit products, including interest bearing and non-interest bearing checking accounts, savings accounts, money market accounts, individual retirement accounts, and certificates of deposit. It also provides commercial real estate loans, consumer real estate loans, and construction and land development loans; commercial and industrial loans, including commercial, financial, and agricultural loans; and consumer and other loans, such as direct consumer installment loans, overdrafts and other revolving credit loans, and educational loans. In addition, the company offers Internet and mobile banking services. As of December 31, 2018, it operated through 29 full-service branches located in Tennessee, Alabama, and Florida; and 2 loan production offices, 2 mortgage loan production offices, and 2 service centers. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.

About Pacific Mercantile Bancorp

Pacific Mercantile Bancorp operates as the holding company for Pacific Mercantile Bank that provides a range of commercial banking products and services to small and medium-size businesses, professional firms, and individuals in Southern California, the United States. The company's deposit products include checking accounts, interest-bearing term deposit accounts, savings and money market deposits, and time deposits. It also offers various loan products, such as commercial loans and credit lines, accounts receivable and inventory financing, small business administration guaranteed business loans, owner-occupied commercial real estate loans, working capital lines of credit and asset based lending, growth capital loans, equipment financing, letters of credit, and corporate credit cards. In addition, the company provides cash and treasury management solutions, automated clearinghouse payment and wire solutions, fraud protection services, remote deposit capture services, courier services, and online banking services; and letters of credit and import/export financing services. As of March 6, 2019, it operated seven locations in Orange, Los Angeles, San Diego, and San Bernardino counties, Southern California. The company was founded in 1998 and is based in Costa Mesa, California.

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