Flagstar Bancorp (NYSE: FBC) and Shore Bancshares (NASDAQ:SHBI) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Dividends

Shore Bancshares pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Flagstar Bancorp does not pay a dividend. Shore Bancshares pays out 25.0% of its earnings in the form of a dividend.

Institutional and Insider Ownership

96.3% of Flagstar Bancorp shares are held by institutional investors. Comparatively, 68.0% of Shore Bancshares shares are held by institutional investors. 63.0% of Flagstar Bancorp shares are held by insiders. Comparatively, 2.4% of Shore Bancshares shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Flagstar Bancorp 16.52% 10.15% 0.92%
Shore Bancshares 16.85% 6.65% 0.86%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Flagstar Bancorp and Shore Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flagstar Bancorp 0 2 5 0 2.71
Shore Bancshares 0 0 0 0 N/A

Flagstar Bancorp currently has a consensus price target of $35.25, indicating a potential downside of 1.07%. Given Flagstar Bancorp’s higher probable upside, equities research analysts clearly believe Flagstar Bancorp is more favorable than Shore Bancshares.

Risk and Volatility

Flagstar Bancorp has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Shore Bancshares has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500.

Valuation & Earnings

This table compares Flagstar Bancorp and Shore Bancshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Flagstar Bancorp $783.00 million 2.60 $149.76 million $2.62 13.60
Shore Bancshares $54.88 million 3.92 $10.15 million $0.80 21.19

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

Summary

Flagstar Bancorp beats Shore Bancshares on 11 of the 15 factors compared between the two stocks.

Flagstar Bancorp Company Profile

Flagstar Bancorp, Inc. is a savings and loan holding company. The Company’s business is primarily conducted through its principal subsidiary, Flagstar Bank, FSB. It operates through four segments: Community Banking, Mortgage Originations, Mortgage Servicing, and Other. Through Mortgage Originations segment, it originates, acquires and sells one- to four-family residential mortgage loans. The Mortgage Servicing segment includes services and subservices mortgage loans, on a fee basis, for others. The Community Banking segment originates loans, provides deposits and fee based services to consumer, business and mortgage lending customers through its Branch Banking, Business and Commercial Banking, Government Banking, Warehouse Lending and Held-for-Investment Portfolio groups. It offers checking accounts, savings accounts, money market accounts, certificates of deposit and others. Other financial services include lines of credit, revolving credit, inventory and accounts receivable.

Shore Bancshares Company Profile

Shore Bancshares, Inc. is a financial holding company. The Company acts as the parent company to several financial institution and insurance entities. The Company has two business segments: Community Banking, and Insurance Products and Services. Its Community Banking segment provides services to consumers and small businesses on the Eastern Shore of Maryland and in Delaware. The Company is engaged in the banking business through CNB, a Maryland commercial bank with trust powers and The Talbot Bank of Easton, a Maryland commercial bank (the Banks). Its Insurance Products and Services segment provides a range of insurance products and services to businesses and consumers in the Company’s market areas. The Banks provide a range of commercial and consumer banking products and services to individuals, businesses, and other organizations in Kent County, Queen Anne’s County, Caroline County, Talbot County and Dorchester County in Maryland and in Kent County, Delaware.

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