Critical Comparison: Summit State Bank (NASDAQ:SSBI) and Sierra Bancorp (NASDAQ:BSRR)

Summit State Bank (NASDAQ:SSBI) and Sierra Bancorp (NASDAQ:BSRR) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.

Analyst Recommendations

This is a summary of current recommendations for Summit State Bank and Sierra Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Summit State Bank	0	0	0	0	0.00
Sierra Bancorp	0	2	1	0	2.33

Sierra Bancorp has a consensus price target of $33.50, indicating a potential upside of 12.12%. Given Sierra Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Sierra Bancorp is more favorable than Summit State Bank.

Earnings and Valuation

This table compares Summit State Bank and Sierra Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Summit State Bank	$34.72 million	2.31	-$3.66 million	($0.16)	-74.06
Sierra Bancorp	$139.71 million	2.91	$40.56 million	$2.89	10.34

Sierra Bancorp has higher revenue and earnings than Summit State Bank. Summit State Bank is trading at a lower price-to-earnings ratio than Sierra Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Summit State Bank and Sierra Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Summit State Bank	-1.70%	N/A	N/A
Sierra Bancorp	20.09%	11.44%	1.11%

Institutional & Insider Ownership

55.4% of Sierra Bancorp shares are held by institutional investors. 11.9% of Sierra 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.

Dividends

Summit State Bank pays an annual dividend of $0.16 per share and has a dividend yield of 1.4%. Sierra Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. Summit State Bank pays out -100.0% of its earnings in the form of a dividend. Sierra Bancorp pays out 34.6% 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. Sierra Bancorp has increased its dividend for 2 consecutive years. Sierra Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Summit State Bank has a beta of 0.16, suggesting that its stock price is 84% less volatile than the S&P 500. Comparatively, Sierra Bancorp has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Summary

Sierra Bancorp beats Summit State Bank on 16 of the 17 factors compared between the two stocks.

About Summit State Bank

Summit State Bank engages in providing an array of financial services to small and medium-sized businesses, their owners and employees, entrepreneurs, high net worth families, foundations, estates, and individual consumers. It specializes in business services, personal accounts, nonprofit programs, and mobile banking ranging from lending, checking, merchant, eBanking, automated teller machines, equity loans, and others. The company was founded on December 20, 1982 and is headquartered in Santa Rosa, CA.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.