1st Constitution Bancorp (NASDAQ: FCCY) and Square 1 Financial (NASDAQ:SQBK) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.
Earnings & Valuation
This table compares 1st Constitution Bancorp and Square 1 Financial’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|1st Constitution Bancorp||$49.90 million||3.13||$6.93 million||$0.83||23.25|
|Square 1 Financial||N/A||N/A||N/A||$1.17||22.50|
Institutional and Insider Ownership
27.9% of 1st Constitution Bancorp shares are held by institutional investors. 14.5% of 1st Constitution Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares 1st Constitution Bancorp and Square 1 Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|1st Constitution Bancorp||13.64%||8.09%||0.84%|
|Square 1 Financial||25.41%||12.33%||1.10%|
This is a breakdown of current ratings for 1st Constitution Bancorp and Square 1 Financial, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|1st Constitution Bancorp||0||1||0||0||2.00|
|Square 1 Financial||0||0||0||0||N/A|
1st Constitution Bancorp currently has a consensus target price of $18.00, indicating a potential downside of 6.74%. Given 1st Constitution Bancorp’s higher possible upside, equities research analysts clearly believe 1st Constitution Bancorp is more favorable than Square 1 Financial.
1st Constitution Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. Square 1 Financial does not pay a dividend. 1st Constitution Bancorp pays out 28.9% of its earnings in the form of a dividend.
1st Constitution Bancorp beats Square 1 Financial on 6 of the 11 factors compared between the two stocks.
About 1st Constitution Bancorp
1st Constitution Bancorp is the bank holding company for 1st Constitution Bank (the Bank). The Bank is a commercial bank, which is engaged in the business of commercial and retail banking. The Company operates through the Community Banking segment. The Community Banking segment consists of construction, commercial, retail and mortgage banking operations. As a community bank, the Bank offers a range of services (including demand, savings and time deposits and commercial and consumer/installment loans) to individuals, small businesses and not-for-profit organizations principally in the Fort Lee area of Bergen County and in Middlesex, Mercer, Somerset and Monmouth Counties of New Jersey. The Bank’s Mortgage Warehouse Funding Group offers revolving lines of credit that are available to licensed mortgage banking companies (the Warehouse Line of Credit). The Bank’s investment activities are classified as available for sale and held to maturity securities.
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.
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