Critical Analysis: Pinnacle Bankshares (OTCMKTS:PPBN) & First Bancorp (NASDAQ:FBNC)

Pinnacle Bankshares (OTCMKTS:PPBN) and First Bancorp (NASDAQ:FBNC) are both 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.

Profitability

This table compares Pinnacle Bankshares and First Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle Bankshares	19.32%	13.27%	1.11%
First Bancorp	20.59%	10.86%	1.38%

Earnings & Valuation

This table compares Pinnacle Bankshares and First Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Bankshares	$59.05 million	1.91	$10.77 million	$5.21	9.95
First Bancorp	$549.30 million	4.49	$111.05 million	$2.93	20.35

First Bancorp has higher revenue and earnings than Pinnacle Bankshares. Pinnacle Bankshares 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 recent recommendations for Pinnacle Bankshares and First Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Bankshares	0	0	0	0	0.00
First Bancorp	0	2	3	1	2.83

First Bancorp has a consensus target price of $62.25, suggesting a potential upside of 4.38%. Given First Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe First Bancorp is more favorable than Pinnacle Bankshares.

Institutional and Insider Ownership

3.8% of Pinnacle Bankshares shares are held by institutional investors. Comparatively, 68.4% of First Bancorp shares are held by institutional investors. 6.5% of Pinnacle Bankshares shares are held by company insiders. Comparatively, 2.0% of First Bancorp 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

Pinnacle Bankshares pays an annual dividend of $1.12 per share and has a dividend yield of 2.2%. First Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 1.6%. Pinnacle Bankshares pays out 21.5% of its earnings in the form of a dividend. First Bancorp pays out 32.8% 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. Pinnacle Bankshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Pinnacle Bankshares has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500. Comparatively, First Bancorp has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500.

Summary

First Bancorp beats Pinnacle Bankshares on 12 of the 17 factors compared between the two stocks.

About Pinnacle Bankshares

Pinnacle Bankshares Corporation operates as the bank holding company for First National Bank that provides a range of commercial and retail banking products and services. The company accepts checking accounts, savings and time deposits, individual retirement accounts, certificates of deposit, and money market accounts. Its loan products include residential and commercial mortgage loans, home equity loans, consumer installment loans, agricultural loans, investment loans, small business loans, commercial lines of credit, and letters of credit. The company also provides credit cards; insurance products, including property and casualty, life, and health; investment and annuity products; and overdraft protection, merchant bankcard processing, cash management, remote deposit capture, night drop, safe deposit boxes, and notary services, as well as telephone, mobile, and online banking services. It operates branches in Amherst County, Bedford County, Campbell County, Pittsylvania County; and the city of Danville, Lynchburg and Charlottesville. The company was founded in 1908 and is headquartered in Altavista, Virginia.

About First Bancorp

First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses. The company accepts deposit products, such as checking, savings, and money market accounts, as well as time deposits, including certificate of deposits and individual retirement accounts. It also offers loans for a range of consumer and commercial purposes comprising loans for business, real estate, personal, home improvement, and automobiles, as well as residential mortgages and small business administration loans; and accounts receivable financing and factoring, inventory financing, and purchase order financing services. In addition, the company provides credit and debit cards, letter of credits, and safe deposit box rental services, as well as electronic funds transfer services consisting of wire transfers; and internet and mobile banking, cash management, bank-by-phone services, and remote deposit capture services. Further, it offers investment and insurance products, such as mutual funds, annuities, long-term care insurance, life insurance, and company retirement plans, as well as property and casualty insurance products; and financial planning services. The company was founded in 1934 and is headquartered in Southern Pines, North Carolina.