Critical Review: FB Financial (NYSE:FBK) & First Business Financial Services (NASDAQ:FBIZ)

First Business Financial Services (NASDAQ:FBIZ) and FB Financial (NYSE:FBK) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Insider and Institutional Ownership

60.1% of First Business Financial Services shares are owned by institutional investors. Comparatively, 65.4% of FB Financial shares are owned by institutional investors. 6.3% of First Business Financial Services shares are owned by company insiders. Comparatively, 1.7% of FB Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

First Business Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 2.5%. FB Financial pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. First Business Financial Services pays out 22.2% of its earnings in the form of a dividend. FB Financial pays out 30.8% 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 13 consecutive years. First Business Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

First Business Financial Services has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, FB Financial has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for First Business Financial Services and FB 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
FB Financial	1	3	1	0	2.00

First Business Financial Services currently has a consensus price target of $58.75, suggesting a potential upside of 25.91%. FB Financial has a consensus price target of $50.20, suggesting a potential upside of 12.46%. Given First Business Financial Services’ stronger consensus rating and higher possible upside, research analysts plainly believe First Business Financial Services is more favorable than FB Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	16.86%	14.33%	1.16%
FB Financial	15.18%	10.43%	1.25%

Earnings and Valuation

This table compares First Business Financial Services and FB Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$153.46 million	2.52	$44.24 million	$5.22	8.94
FB Financial	$457.74 million	4.55	$116.04 million	$2.47	18.07

FB 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 FB Financial, indicating that it is currently the more affordable of the two stocks.

Summary

First Business Financial Services beats FB Financial on 10 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 FB Financial

FB Financial Corporation operates as a bank holding company for FirstBank that provides a suite of commercial and consumer banking services to businesses, professionals, and individuals. The company operates in segments, such as Banking and Mortgage. It offers checking, demand, money market, and savings accounts; deposit and lending products and services to corporate, commercial, and consumer customers; and time deposits and certificates of deposits, as well as residential mortgage loans. The company also provides owner-occupied and non-owner-occupied real estate commercial, residential real estate 1-4 family mortgage, multi-family residential, commercial and industrial, construction, land acquisition, residential lines of credit, and land development loans; and consumer and other loans, such as car, boat, and other recreational vehicle loans, as well as manufactured homes without real estate and personal lines of credit. In addition, the company offers mortgage banking services through its bank branch network and mortgage banking offices in the southeastern United States; direct-to-consumer internet delivery channel; and trust, insurance, and investment services, as well as online and mobile banking services. The company operates full-service bank branches and limited-service branches locations throughout Tennessee, Nashville, Chattanooga, Knoxville, Memphis, Jackson, Birmingham, Florence, Huntsville, Alabama, Bowling Green, and Kentucky; and mortgage offices throughout the southeastern United States. The company was formerly known as First South Bancorp, Inc. and changed its name to FB Financial Corporation in 2016. FB Financial Corporation was founded in 1906 and is headquartered in Nashville, Tennessee.