Financial Analysis: Peoples Financial (OTCMKTS:PFBX) vs. United Community Banks (NYSE:UCB)

United Community Banks (NYSE:UCB) and Peoples Financial (OTCMKTS:PFBX) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Analyst Ratings

This is a summary of current ratings and target prices for United Community Banks and Peoples Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	3	4	0	2.57
Peoples Financial	0	0	0	0	0.00

United Community Banks presently has a consensus price target of $39.00, indicating a potential upside of 17.63%. Given United Community Banks’ stronger consensus rating and higher probable upside, research analysts clearly believe United Community Banks is more favorable than Peoples Financial.

Earnings and Valuation

This table compares United Community Banks and Peoples Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$1.04 billion	3.81	$328.10 million	$2.61	12.70
Peoples Financial	$35.66 million	2.72	$3.91 million	$0.85	24.72

United Community Banks has higher revenue and earnings than Peoples Financial. United Community Banks is trading at a lower price-to-earnings ratio than Peoples Financial, indicating that it is currently the more affordable of the two stocks.

Dividends

United Community Banks pays an annual dividend of $1.00 per share and has a dividend yield of 3.0%. Peoples Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. United Community Banks pays out 38.3% of its earnings in the form of a dividend. Peoples Financial pays out 42.4% 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. United Community Banks is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

82.3% of United Community Banks shares are owned by institutional investors. Comparatively, 32.8% of Peoples Financial shares are owned by institutional investors. 0.5% of United Community Banks shares are owned by company insiders. Comparatively, 28.1% of Peoples Financial shares are owned 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.

Risk & Volatility

United Community Banks has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Peoples Financial has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500.

Profitability

This table compares United Community Banks and Peoples Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	21.35%	9.49%	1.20%
Peoples Financial	10.97%	3.99%	0.50%

Summary

United Community Banks beats Peoples Financial on 14 of the 16 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.

About Peoples Financial

Peoples Financial Corporation operates as the bank holding company for The Peoples Bank that provides banking, financial, and trust services to government entities, individuals, and small and commercial businesses in Mississippi. The company accepts various deposits, such as interest and non-interest-bearing checking accounts, savings accounts, certificates of deposit, and individual retirement accounts (IRAs). It offers business, commercial, real estate, construction, personal, and installment loans; and personal trust, agencies, and estate services, including living and testamentary trusts, executorships, guardianships, and conservatorships. In addition, the company provides self-directed IRAs; and escrow management, stock transfer, and bond paying agency accounts to corporate customers. Further, it offers other services consisting of safe deposit box rental, wire transfer, night drop facilities, collection, cash management, and Internet banking services. the company provides services to customers of various industries, such as seafood, retail, hospitality, hotel/motel, gaming, and construction. Peoples Financial Corporation was founded in 1896 and is headquartered in Biloxi, Mississippi.