Head to Head Analysis: First Bancorp (NASDAQ:FBNC) vs. Enterprise Bancorp (NASDAQ:EBTC)

Enterprise Bancorp (NASDAQ:EBTC) and First Bancorp (NASDAQ:FBNC) 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, earnings, risk, profitability, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

38.9% of Enterprise Bancorp shares are owned by institutional investors. Comparatively, 68.4% of First Bancorp shares are owned by institutional investors. 21.7% of Enterprise Bancorp shares are owned by company insiders. Comparatively, 3.7% of First Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Enterprise Bancorp and First Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Enterprise Bancorp	0	0	0	0	0.00
First Bancorp	0	0	1	0	3.00

First Bancorp has a consensus price target of $45.00, indicating a potential downside of 5.98%. Given First Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe First Bancorp is more favorable than Enterprise Bancorp.

Valuation & Earnings

This table compares Enterprise Bancorp and First Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Enterprise Bancorp	$218.66 million	2.07	$38.06 million	$2.90	12.56
First Bancorp	$546.25 million	3.62	$104.13 million	$2.48	19.30

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

Profitability

This table compares Enterprise Bancorp and First Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Enterprise Bancorp	14.53%	10.48%	0.77%
First Bancorp	17.98%	8.00%	0.93%

Dividends

Enterprise Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 2.6%. First Bancorp pays an annual dividend of $0.88 per share and has a dividend yield of 1.8%. Enterprise Bancorp pays out 33.1% of its earnings in the form of a dividend. First Bancorp pays out 35.5% 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. Enterprise Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Enterprise Bancorp has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, First Bancorp has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Summary

First Bancorp beats Enterprise Bancorp on 11 of the 16 factors compared between the two stocks.

About Enterprise Bancorp

Enterprise Bancorp, Inc. operates as the holding company for Enterprise Bank and Trust Company that engages in the provision of commercial banking products and services. It offers commercial and retail deposit products, including checking accounts, limited-transactional savings and money market accounts, commercial sweep products, and term certificates of deposit. The company also provides commercial real estate, commercial and industrial, commercial construction, residential, and consumer loans, as well as home equity loans and lines of credit. In addition, the company offers cash management services; wealth advisory and management services that include customized investment management and trust services to individuals, family groups, commercial businesses, trusts, foundations, non-profit organizations, and endowments; brokerage and management services to individual investors; insurance services; and online and mobile banking services. The company was founded in 1989 and is headquartered in Lowell, Massachusetts.

About First Bancorp

First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses. The company accepts deposit products, such as checking, savings, and money market accounts, as well as time deposits, including certificate of deposits and individual retirement accounts. It also offers loans for a range of consumer and commercial purposes comprising loans for business, real estate, personal, home improvement, and automobiles, as well as residential mortgages and small business administration loans; and accounts receivable financing and factoring, inventory financing, and purchase order financing services. In addition, the company provides credit and debit cards, letter of credits, and safe deposit box rental services, as well as electronic funds transfer services consisting of wire transfers; and internet and mobile banking, cash management, bank-by-phone services, and remote deposit capture services. Further, it offers investment and insurance products, such as mutual funds, annuities, long-term care insurance, life insurance, and company retirement plans, as well as property and casualty insurance products; and financial planning services. The company was founded in 1934 and is headquartered in Southern Pines, North Carolina.