Analyzing First Community Bancshares (FCBC) and Washington Trust Bancorp (WASH)

First Community Bancshares (NASDAQ: FCBC) and Washington Trust Bancorp (NASDAQ:WASH) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, institutional ownership, earnings, risk and valuation.

Insider and Institutional Ownership

40.3% of First Community Bancshares shares are owned by institutional investors. Comparatively, 55.3% of Washington Trust Bancorp shares are owned by institutional investors. 3.3% of First Community Bancshares shares are owned by insiders. Comparatively, 2.6% of Washington Trust Bancorp shares are owned 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.

Earnings and Valuation

This table compares First Community Bancshares and Washington Trust Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Community Bancshares $107.58 million 4.83 $26.72 million $1.57 19.45
Washington Trust Bancorp $174.06 million 5.56 $49.74 million $2.89 19.46

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

Volatility & Risk

First Community Bancshares has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Washington Trust Bancorp has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Dividends

First Community Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.4%. Washington Trust Bancorp pays an annual dividend of $1.56 per share and has a dividend yield of 2.8%. First Community Bancshares pays out 45.9% of its earnings in the form of a dividend. Washington Trust Bancorp pays out 54.0% 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.

Analyst Recommendations

This is a breakdown of current ratings for First Community Bancshares and Washington Trust Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Community Bancshares 0 2 0 0 2.00
Washington Trust Bancorp 0 2 0 0 2.00

First Community Bancshares currently has a consensus target price of $23.50, indicating a potential downside of 23.03%. Washington Trust Bancorp has a consensus target price of $55.00, indicating a potential downside of 2.22%. Given Washington Trust Bancorp’s higher possible upside, analysts clearly believe Washington Trust Bancorp is more favorable than First Community Bancshares.

Profitability

This table compares First Community Bancshares and Washington Trust Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Community Bancshares 22.32% 7.72% 1.11%
Washington Trust Bancorp 23.63% 12.56% 1.14%

Summary

Washington Trust Bancorp beats First Community Bancshares on 11 of the 13 factors compared between the two stocks.

About First Community Bancshares

First Community Bancshares, Inc. is a financial holding company. The Company provides commercial banking products and services through its subsidiary First Community Bank (the Bank). The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. It provides insurance services through its subsidiary First Community Insurance Services, and offers wealth management and investment advice through its Trust Division and subsidiary First Community Wealth Management. Its products include demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement arrangements; commercial, consumer, and real estate mortgage loans and lines of credit; various credit card, debit card, and automated teller machine card services; corporate and personal trust services; investment management services, and life, health, and property and casualty insurance products.

About Washington Trust Bancorp

Washington Trust Bancorp, Inc. is a bank holding company and financial holding company. The Company is a holding company of The Washington Trust Company, of Westerly (the Bank), a Rhode Island chartered commercial bank. The Company operates through two business segments: Commercial Banking and Wealth Management Services. The Company offers a range of product lines of banking and financial services to individuals and businesses, including commercial, residential and consumer lending, retail and commercial deposit products, and wealth management services through its offices in Rhode Island, eastern Massachusetts and Connecticut; its automated teller machines (ATMs); telephone banking; mobile banking and its Internet Website (www.washtrust.com). Its investment securities portfolio amounted to $755.5 million, as of December 31, 2016. The Company’s total loan portfolio amounted to $3.2 billion, as of December 31, 2016.

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