Contrasting First Bancshares (NASDAQ:FBMS) & Pathward Financial (NASDAQ:CASH)

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

Volatility and Risk

First Bancshares has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Pathward Financial has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bancshares	18.40%	8.29%	1.02%
Pathward Financial	21.91%	22.02%	2.28%

Analyst Recommendations

This is a breakdown of current ratings and price targets for First Bancshares and Pathward Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bancshares	0	2	1	0	2.33
Pathward Financial	0	1	1	0	2.50

First Bancshares currently has a consensus price target of $38.75, suggesting a potential upside of 7.47%. Pathward Financial has a consensus price target of $90.50, suggesting a potential upside of 16.79%. Given Pathward Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Pathward Financial is more favorable than First Bancshares.

Insider & Institutional Ownership

70.0% of First Bancshares shares are owned by institutional investors. Comparatively, 92.7% of Pathward Financial shares are owned by institutional investors. 3.5% of First Bancshares shares are owned by insiders. Comparatively, 1.2% of Pathward Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

First Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. First Bancshares pays out 41.0% of its earnings in the form of a dividend. Pathward Financial pays out 2.9% 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 First Bancshares and Pathward Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bancshares	$419.60 million	2.68	$77.19 million	$2.44	14.78
Pathward Financial	$775.94 million	2.38	$168.36 million	$6.86	11.30

Pathward Financial has higher revenue and earnings than First Bancshares. Pathward 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.

Summary

Pathward Financial beats First Bancshares on 10 of the 15 factors compared between the two stocks.

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.

About Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.