Reviewing OceanFirst Financial (NASDAQ:OCFC) & First Bancshares (NASDAQ:FBMS)

OceanFirst Financial (NASDAQ:OCFC) and First Bancshares (NASDAQ:FBMS) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, profitability, analyst recommendations, earnings and risk.

Dividends

OceanFirst Financial pays an annual dividend of $0.80 per share and has a dividend yield of 4.5%. First Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.9%. OceanFirst Financial pays out 46.8% of its earnings in the form of a dividend. First Bancshares pays out 39.7% 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.

Valuation & Earnings

This table compares OceanFirst Financial and First Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OceanFirst Financial	$388.93 million	2.70	$104.03 million	$1.71	10.45
First Bancshares	$275.82 million	3.88	$75.46 million	$2.52	13.60

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

Analyst Recommendations

This is a summary of current recommendations and price targets for OceanFirst Financial and First Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OceanFirst Financial	0	4	1	0	2.20
First Bancshares	0	1	2	0	2.67

OceanFirst Financial currently has a consensus price target of $18.00, indicating a potential upside of 0.73%. First Bancshares has a consensus price target of $35.50, indicating a potential upside of 3.62%. Given First Bancshares’ stronger consensus rating and higher probable upside, analysts plainly believe First Bancshares is more favorable than OceanFirst Financial.

Institutional & Insider Ownership

71.0% of OceanFirst Financial shares are owned by institutional investors. Comparatively, 69.9% of First Bancshares shares are owned by institutional investors. 5.0% of OceanFirst Financial shares are owned by company insiders. Comparatively, 3.5% of First Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares OceanFirst Financial and First Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OceanFirst Financial	14.78%	5.85%	0.72%
First Bancshares	18.71%	8.90%	1.05%

Risk and Volatility

OceanFirst Financial has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, First Bancshares has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Summary

First Bancshares beats OceanFirst Financial on 10 of the 16 factors compared between the two stocks.

About OceanFirst Financial

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.

About First Bancshares

The First Bancshares, Inc. operates as the bank holding company for The First Bank that provides general commercial and retail banking services. The company operates through three segments: Commercial/Retail Bank, Mortgage Banking Division, and Holding Company. It offers deposit services, including checking, NOW, and savings accounts; other time deposits, such as daily money market accounts and longer-term certificates of deposit; and individual retirement and health savings accounts. The company also provides commercial loans comprising secured and unsecured loans for working capital, business expansion, and purchase of equipment and machinery; consumer loans consisting of equity lines of credit, as well as secured and unsecured loans for financing automobiles, home improvements, education, and personal investments; and real estate construction and acquisition loans. In addition, it originates loans to purchase existing residential homes, construct new homes, and to refinance existing mortgages; and provides financial and wealth management services. Further, the company offers online internet banking services, automated teller machines, voice response telephone inquiry services, commercial sweep accounts, cash management services, safe deposit boxes, merchant services, mobile deposit, direct deposit of payroll and social security checks, automatic drafts for various accounts, and credit card services. It serves small to medium-sized businesses, professional concerns, individuals, associations, organizations, and governmental authorities. The company operates full-service banking and financial service offices, motor bank facility, and loan production offices in Mississippi, Alabama, Florida, Georgia, and Louisiana. The First Bancshares, Inc. was incorporated in 1995 and is headquartered in Hattiesburg, Mississippi.