Financial Review: Square 1 Financial (SQBK) and Pacific Continental (PCBK)

Square 1 Financial (NASDAQ: SQBK) and Pacific Continental (NASDAQ:PCBK) are both small-cap financials companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Insider and Institutional Ownership

67.5% of Pacific Continental shares are held by institutional investors. 4.8% of Pacific Continental shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Square 1 Financial and Pacific Continental, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Square 1 Financial 0 0 0 0 N/A
Pacific Continental 0 1 0 0 2.00

Pacific Continental has a consensus price target of $28.00, suggesting a potential upside of 0.00%. Given Pacific Continental’s higher probable upside, analysts plainly believe Pacific Continental is more favorable than Square 1 Financial.

Dividends

Pacific Continental pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. Square 1 Financial does not pay a dividend. Pacific Continental pays out 38.9% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Square 1 Financial and Pacific Continental’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Square 1 Financial N/A N/A N/A $1.17 22.50
Pacific Continental $97.76 6,521,685.76 $19.77 $1.13 24.78

Pacific Continental has higher revenue and earnings than Square 1 Financial. Square 1 Financial is trading at a lower price-to-earnings ratio than Pacific Continental, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Square 1 Financial and Pacific Continental’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Square 1 Financial 25.41% 12.33% 1.10%
Pacific Continental 26.45% 10.15% 1.10%

Summary

Pacific Continental beats Square 1 Financial on 7 of the 10 factors compared between the two stocks.

About Square 1 Financial

Square 1 Financial, Inc. is a financial services company. The Company is a bank holding company for Square 1 Bank. Through Square 1 Bank, the Company offers a range of banking and financial products and services throughout the United States, focused on the entrepreneurial community and venture capital and private equity firms. Its primary focus is on venture-backed technology and life sciences companies located throughout the United States. It also focuses on venture firms. The Company is also involved in networking activities in the startup communities in several of its markets. It maintains a presence in these communities through participation in events sponsored by incubators or accelerators, which are informal associations engaged in a range of activities designed to promote and encourage the startup and development of new companies.

About Pacific Continental

Pacific Continental Corporation is a bank holding company. The Company’s principal business activities are conducted through its subsidiary, Pacific Continental Bank (the Bank), an Oregon state-chartered bank with deposits insured by the Federal Deposit Insurance Corporation. The Bank operates in three primary markets: Eugene, Oregon, Portland; Oregon/Southwest Washington, and Seattle, Washington. As of December 31, 2016, the Bank operated 15 full-service offices in Oregon and Washington and two loan production offices in Washington and Colorado. The Bank primarily operates in large commercial markets and provides banking and related services designed for community-based businesses, nonprofit organizations, professional service providers and banking services for business owners. It provides traditional commercial and consumer banking services, including cash management products for businesses, online banking, safe deposit services debit and automated teller machine cards and others.

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