Critical Comparison: Provident Financial Services (NYSE:PFS) vs. Carter Bankshares (NASDAQ:CARE)

Carter Bankshares (NASDAQ:CARE) and Provident Financial Services (NYSE:PFS) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Institutional and Insider Ownership

41.5% of Carter Bankshares shares are owned by institutional investors. Comparatively, 72.0% of Provident Financial Services shares are owned by institutional investors. 2.4% of Carter Bankshares shares are owned by company insiders. Comparatively, 3.0% of Provident Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Carter Bankshares and Provident Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carter Bankshares	36.79%	7.46%	0.73%
Provident Financial Services	22.15%	11.00%	1.24%

Dividends

Carter Bankshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Provident Financial Services pays an annual dividend of $0.96 per share and has a dividend yield of 4.3%. Carter Bankshares pays out 6.9% of its earnings in the form of a dividend. Provident Financial Services pays out 40.0% 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.

Earnings and Valuation

This table compares Carter Bankshares and Provident Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carter Bankshares	$254.63 million	2.64	$31.00 million	$5.81	5.22
Provident Financial Services	$1.38 billion	2.09	$291.16 million	$2.40	9.24

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

Volatility & Risk

Carter Bankshares has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Carter Bankshares and Provident Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carter Bankshares	0	4	1	0	2.20
Provident Financial Services	0	2	4	1	2.86

Carter Bankshares currently has a consensus price target of $30.75, suggesting a potential upside of 1.45%. Provident Financial Services has a consensus price target of $26.79, suggesting a potential upside of 20.75%. Given Provident Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Provident Financial Services is more favorable than Carter Bankshares.

Summary

Provident Financial Services beats Carter Bankshares on 13 of the 17 factors compared between the two stocks.

About Carter Bankshares

Carter Bankshares, Inc. operates as the bank holding company for Carter Bank & Trust that provides various banking products and services in the United States. It accepts various deposit products, including checking, savings, retirement, and money market accounts, as well as certificates of deposits. The company also offers commercial loans comprising secured and unsecured loans; consumer loans, such as secured and unsecured loans for financing automobiles, home improvements, education, overdraft protection, and personal investments, as well as residential mortgages; real estate construction, acquisition, commercial, and industrial loans; home equity lines of credit; and credit cards, as well as originates and holds fixed and variable rate mortgage loans. In addition, it provides other banking services that include safe deposit boxes, direct deposit of payroll, and social security checks; online banking products, including online and mobile banking, online account opening, bill pay, e-statement, mobile deposit, digital wallet, and ATM services; title insurance and other financial institution-related products and services; and treasury and corporate cash management services. Carter Bankshares, Inc. was founded in 1974 and is headquartered in Martinsville, Virginia.

About Provident Financial Services

Provident Financial Services, Inc. operates as the bank holding company for Provident Bank that provides various banking products and services to individuals, families, and businesses in the United States. Its deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA products. The company's loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, retail and industrial properties, and office buildings; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, personal loans and unsecured lines of credit, and auto and recreational vehicle loans. It also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, the company provides wealth management services comprising investment management, trust and estate administration, financial planning, and tax compliance and planning. Further, it sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure. The company was founded in 1839 and is headquartered in Jersey City, New Jersey.