Prosperity Bancshares (NYSE:PB) versus First Commonwealth Financial (NYSE:FCF) Critical Comparison

First Commonwealth Financial (NYSE:FCF) and Prosperity Bancshares (NYSE:PB) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Risk and Volatility

First Commonwealth Financial has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Dividends

First Commonwealth Financial pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.3%. First Commonwealth Financial pays out 33.1% of its earnings in the form of a dividend. Prosperity Bancshares pays out 43.6% 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. First Commonwealth Financial has raised its dividend for 9 consecutive years and Prosperity Bancshares has raised its dividend for 27 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for First Commonwealth Financial and Prosperity Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Commonwealth Financial	0	2	4	0	2.67
Prosperity Bancshares	2	6	7	1	2.44

First Commonwealth Financial presently has a consensus price target of $24.00, indicating a potential upside of 14.70%. Prosperity Bancshares has a consensus price target of $78.36, indicating a potential upside of 7.96%. Given First Commonwealth Financial’s stronger consensus rating and higher possible upside, analysts plainly believe First Commonwealth Financial is more favorable than Prosperity Bancshares.

Earnings & Valuation

This table compares First Commonwealth Financial and Prosperity Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Commonwealth Financial	$729.51 million	2.78	$152.30 million	$1.69	12.38
Prosperity Bancshares	$1.74 billion	5.00	$542.84 million	$5.50	13.20

Prosperity Bancshares has higher revenue and earnings than First Commonwealth Financial. First Commonwealth Financial is trading at a lower price-to-earnings ratio than Prosperity Bancshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares First Commonwealth Financial and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Commonwealth Financial	23.06%	11.17%	1.40%
Prosperity Bancshares	26.99%	7.68%	1.45%

Insider and Institutional Ownership

72.6% of First Commonwealth Financial shares are held by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are held by institutional investors. 1.9% of First Commonwealth Financial shares are held by insiders. Comparatively, 4.0% of Prosperity Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Prosperity Bancshares beats First Commonwealth Financial on 12 of the 18 factors compared between the two stocks.

About First Commonwealth Financial

First Commonwealth Financial Corporation is a bank holding company headquartered in Indiana, Pennsylvania. Through its subsidiary, First Commonwealth Bank, the company provides banking and financial services to individuals, businesses and organizations. Its services include consumer and commercial banking, lending, deposit accounts, cash management, wealth management and trust services. The company also offers insurance and other financial services through affiliated businesses. First Commonwealth serves communities in Pennsylvania and Ohio, with a network of branches and other banking locations across those states.

About Prosperity Bancshares

Prosperity Bancshares, Inc. is a bank holding company whose principal subsidiary is Prosperity Bank. The company provides commercial and consumer banking services, including deposit accounts, business and personal loans, mortgage lending, and cash management services. Founded in 1983 as a community bank in Edna, Texas, Prosperity has expanded through organic growth and acquisitions. It serves customers across Texas and Oklahoma, with a presence in communities including Houston, Dallas–Fort Worth, Austin, San Antonio, and Tulsa.