Analyzing Lake Shore Bancorp (NASDAQ:LSBK) and ServisFirst Bancshares (NYSE:SFBS)

Lake Shore Bancorp (NASDAQ:LSBK) and ServisFirst Bancshares (NYSE:SFBS) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent recommendations and price targets for Lake Shore Bancorp and ServisFirst Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lake Shore Bancorp	0	1	0	0	2.00
ServisFirst Bancshares	0	2	2	1	2.80

ServisFirst Bancshares has a consensus target price of $94.33, suggesting a potential upside of 20.45%. Given ServisFirst Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe ServisFirst Bancshares is more favorable than Lake Shore Bancorp.

Profitability

This table compares Lake Shore Bancorp and ServisFirst Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lake Shore Bancorp	20.23%	6.53%	1.11%
ServisFirst Bancshares	28.80%	16.95%	1.74%

Valuation and Earnings

This table compares Lake Shore Bancorp and ServisFirst Bancshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lake Shore Bancorp	$39.56 million	3.17	$7.27 million	$1.18	13.54
ServisFirst Bancshares	$1.02 billion	4.21	$276.60 million	$5.42	14.45

ServisFirst Bancshares has higher revenue and earnings than Lake Shore Bancorp. Lake Shore Bancorp is trading at a lower price-to-earnings ratio than ServisFirst Bancshares, indicating that it is currently the more affordable of the two stocks.

Dividends

Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.3%. ServisFirst Bancshares pays an annual dividend of $1.52 per share and has a dividend yield of 1.9%. Lake Shore Bancorp pays out 30.5% of its earnings in the form of a dividend. ServisFirst Bancshares pays out 28.0% 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. ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Insider and Institutional Ownership

8.8% of Lake Shore Bancorp shares are held by institutional investors. Comparatively, 67.3% of ServisFirst Bancshares shares are held by institutional investors. 8.4% of Lake Shore Bancorp shares are held by company insiders. Comparatively, 6.5% of ServisFirst Bancshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Lake Shore Bancorp has a beta of 0.32, suggesting that its stock price is 68% less volatile than the S&P 500. Comparatively, ServisFirst Bancshares has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500.

Summary

ServisFirst Bancshares beats Lake Shore Bancorp on 16 of the 18 factors compared between the two stocks.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.