Head to Head Survey: Premier Financial (NASDAQ:PFC) and First Business Financial Services (NASDAQ:FBIZ)

First Business Financial Services (NASDAQ:FBIZ) and Premier Financial (NASDAQ:PFC) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for First Business Financial Services and Premier Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Business Financial Services	0	0	4	0	3.00
Premier Financial	0	3	1	0	2.25

First Business Financial Services presently has a consensus price target of $50.00, suggesting a potential upside of 3.91%. Premier Financial has a consensus price target of $22.50, suggesting a potential downside of 17.88%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, equities research analysts clearly believe First Business Financial Services is more favorable than Premier Financial.

Volatility and Risk

First Business Financial Services has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, Premier Financial has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500.

Insider and Institutional Ownership

60.1% of First Business Financial Services shares are owned by institutional investors. Comparatively, 66.1% of Premier Financial shares are owned by institutional investors. 6.2% of First Business Financial Services shares are owned by insiders. Comparatively, 2.2% of Premier Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

First Business Financial Services pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Premier Financial pays an annual dividend of $1.24 per share and has a dividend yield of 4.5%. First Business Financial Services pays out 21.5% of its earnings in the form of a dividend. Premier Financial pays out 62.9% 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. First Business Financial Services has increased its dividend for 12 consecutive years and Premier Financial has increased its dividend for 13 consecutive years. Premier Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares First Business Financial Services and Premier Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	15.46%	13.70%	1.10%
Premier Financial	16.06%	7.51%	0.85%

Valuation and Earnings

This table compares First Business Financial Services and Premier Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$226.24 million	1.77	$37.03 million	$4.66	10.33
Premier Financial	$456.36 million	2.15	$111.29 million	$1.97	13.91

Premier Financial has higher revenue and earnings than First Business Financial Services. First Business Financial Services is trading at a lower price-to-earnings ratio than Premier Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Premier Financial beats First Business Financial Services on 9 of the 17 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.

About Premier Financial

Premier Financial Corp., through its subsidiaries, provides various banking services. It offers demand, checking, money market, and savings accounts, as well as certificates of deposits and certificates of deposit account registry service; and investment products. The company also provides residential and commercial real estate, commercial, construction, home improvement and home equity, installment, and consumer loans. In addition, it invests in the U.S. treasury and federal government agency obligations, obligations of states and political subdivisions, mortgage-backed securities that are issued by federal agencies, residential collateralized mortgage obligations, and corporate bonds. Further, the company offers property and casualty, life, and group health insurance agency services; mezzanine funding services; and digital banking services, which include mobile banking, zelle, online bill pay, and online account opening, as well as the MoneyPass ATM network. It operates in Ohio, Michigan, Indiana, Pennsylvania, and West Virginia. The company was formerly known as First Defiance Financial Corp. and changed its name to Premier Financial Corp. in June 2020. Premier Financial Corp. was founded in 1920 and is headquartered in Defiance, Ohio.