Peoples Financial (OTCMKTS:PFBX) vs. United Community Banks (NYSE:UCB) Financial Analysis

Peoples Financial (OTCMKTS:PFBX) and United Community Banks (NYSE:UCB) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

This table compares Peoples Financial and United Community Banks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Financial	10.97%	3.99%	0.50%
United Community Banks	21.35%	9.49%	1.20%

Dividends

Peoples Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. United Community Banks pays an annual dividend of $1.00 per share and has a dividend yield of 3.0%. Peoples Financial pays out 42.4% of its earnings in the form of a dividend. United Community Banks pays out 38.3% 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. United Community Banks is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

32.8% of Peoples Financial shares are held by institutional investors. Comparatively, 82.3% of United Community Banks shares are held by institutional investors. 28.1% of Peoples Financial shares are held by insiders. Comparatively, 0.5% of United Community Banks shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Peoples Financial and United Community Banks, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Financial	0	0	0	0	0.00
United Community Banks	0	3	4	0	2.57

United Community Banks has a consensus target price of $39.00, indicating a potential upside of 17.63%. Given United Community Banks’ stronger consensus rating and higher probable upside, analysts plainly believe United Community Banks is more favorable than Peoples Financial.

Volatility & Risk

Peoples Financial has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500. Comparatively, United Community Banks has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Valuation and Earnings

This table compares Peoples Financial and United Community Banks”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Financial	$35.66 million	2.72	$3.91 million	$0.85	24.72
United Community Banks	$1.04 billion	3.81	$328.10 million	$2.61	12.70

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

Summary

United Community Banks beats Peoples Financial on 14 of the 16 factors compared between the two stocks.

About Peoples Financial

Peoples Financial Corporation operates as the bank holding company for The Peoples Bank that provides banking, financial, and trust services to government entities, individuals, and small and commercial businesses in Mississippi. The company accepts various deposits, such as interest and non-interest-bearing checking accounts, savings accounts, certificates of deposit, and individual retirement accounts (IRAs). It offers business, commercial, real estate, construction, personal, and installment loans; and personal trust, agencies, and estate services, including living and testamentary trusts, executorships, guardianships, and conservatorships. In addition, the company provides self-directed IRAs; and escrow management, stock transfer, and bond paying agency accounts to corporate customers. Further, it offers other services consisting of safe deposit box rental, wire transfer, night drop facilities, collection, cash management, and Internet banking services. the company provides services to customers of various industries, such as seafood, retail, hospitality, hotel/motel, gaming, and construction. Peoples Financial Corporation was founded in 1896 and is headquartered in Biloxi, Mississippi.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.