Franklin Financial Services (NASDAQ:FRAF – Get Free Report) and Five Star Bancorp (NASDAQ:FSBC – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, earnings, profitability and institutional ownership.
Risk & Volatility
Franklin Financial Services has a beta of -0.02, indicating that its share price is 102% less volatile than the S&P 500. Comparatively, Five Star Bancorp has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.
Profitability
This table compares Franklin Financial Services and Five Star Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Franklin Financial Services | 18.20% | 14.00% | 1.08% |
| Five Star Bancorp | 25.92% | 15.92% | 1.45% |
Valuation & Earnings
This table compares Franklin Financial Services and Five Star Bancorp”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Franklin Financial Services | $133.55 million | 2.12 | $21.23 million | $5.49 | 11.49 |
| Five Star Bancorp | $255.47 million | 4.15 | $61.61 million | $3.38 | 12.78 |
Five Star Bancorp has higher revenue and earnings than Franklin Financial Services. Franklin Financial Services is trading at a lower price-to-earnings ratio than Five Star Bancorp, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
24.8% of Franklin Financial Services shares are owned by institutional investors. Comparatively, 46.9% of Five Star Bancorp shares are owned by institutional investors. 5.9% of Franklin Financial Services shares are owned by company insiders. Comparatively, 21.8% of Five Star Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Dividends
Franklin Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.2%. Five Star Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. Franklin Financial Services pays out 24.8% of its earnings in the form of a dividend. Five Star Bancorp pays out 29.6% 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. Franklin Financial Services has raised its dividend for 1 consecutive years.
Analyst Ratings
This is a breakdown of current ratings for Franklin Financial Services and Five Star Bancorp, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Franklin Financial Services | 0 | 1 | 1 | 0 | 2.50 |
| Five Star Bancorp | 0 | 3 | 3 | 0 | 2.50 |
Franklin Financial Services currently has a consensus price target of $68.00, suggesting a potential upside of 7.83%. Five Star Bancorp has a consensus price target of $47.25, suggesting a potential upside of 9.35%. Given Five Star Bancorp’s higher possible upside, analysts plainly believe Five Star Bancorp is more favorable than Franklin Financial Services.
Summary
Five Star Bancorp beats Franklin Financial Services on 13 of the 16 factors compared between the two stocks.
About Franklin Financial Services
Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.
About Five Star Bancorp
Five Star Bancorp operates as the bank holding company for Five Star Bank that provides a range of banking products and services to small and medium-sized businesses, professionals, and individuals in Northern California. It accepts various deposits, such as money market accounts, noninterest-bearing and interest checking accounts, savings accounts, term certificate accounts, and time deposits. The company also offers loan products, including commercial and residential real estate loans; commercial loans; commercial land loans; farmland loans; commercial and residential construction loans; and consumer and other loans, as well as operating lines of credit. In addition, it provides debit cards; and remote deposit capture, online and mobile banking, and direct deposit services. Five Star Bancorp was founded in 1999 and is headquartered in Rancho Cordova, California.
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