Analyzing Prosperity Bancshares (NYSE:PB) and QNB (OTCMKTS:QNBC)

Prosperity Bancshares (NYSE:PBGet Rating) and QNB (OTCMKTS:QNBCGet Rating) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

80.4% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 17.2% of QNB shares are held by institutional investors. 4.2% of Prosperity Bancshares shares are held by company insiders. Comparatively, 10.7% of QNB shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Prosperity Bancshares and QNB, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prosperity Bancshares 1 2 0 0 1.67
QNB 0 0 0 0 N/A

Prosperity Bancshares currently has a consensus price target of $80.00, indicating a potential upside of 19.74%. Given Prosperity Bancshares’ higher possible upside, equities analysts plainly believe Prosperity Bancshares is more favorable than QNB.

Dividends

Prosperity Bancshares pays an annual dividend of $2.08 per share and has a dividend yield of 3.1%. QNB pays an annual dividend of $1.44 per share and has a dividend yield of 4.0%. Prosperity Bancshares pays out 37.0% of its earnings in the form of a dividend. QNB pays out 31.0% 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. Prosperity Bancshares has increased its dividend for 24 consecutive years. QNB is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Prosperity Bancshares and QNB’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prosperity Bancshares 43.75% 8.21% 1.42%
QNB 29.16% 12.18% 1.02%

Valuation and Earnings

This table compares Prosperity Bancshares and QNB’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Prosperity Bancshares $1.19 billion 5.19 $519.30 million $5.62 11.89
QNB $56.55 million 2.26 $16.49 million $4.64 7.74

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

Risk and Volatility

Prosperity Bancshares has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500. Comparatively, QNB has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500.

Summary

Prosperity Bancshares beats QNB on 11 of the 15 factors compared between the two stocks.

About Prosperity Bancshares (Get Rating)

Prosperity Bancshares, Inc. is a holding company, which engages in the provision of financial products and solutions. It offers retail and commercial banking services such as deposits, online Internet banking, loan, investments, trust, and credit card to small and medium-sized businesses and consumers. The company was founded by Tracy T. Rudolph in 1983 and is headquartered in Houston, TX.

About QNB (Get Rating)

QNB Corp. operates as the bank holding company for QNB Bank that provides commercial and retail banking products and services. It offers various deposit products, which include demand and savings accounts, such as money market, interest-bearing demand, club, traditional statement savings, and online savings accounts; and time deposits comprising certificates of deposit and individual retirement accounts. The company also provides commercial and industrial loans, commercial and residential real estate loans, construction and land development loans, indirect lease financing, 1-4 family residential mortgage loans, home equity loans and lines of credit, and consumer loans. In addition, it offers retail brokerage and advisory services; credit cards and insurance products; merchant services; ATM and debit card services; and internet and mobile-banking, electronic bill pay, and remote deposit capture services. As of December 31, 2021, the company twelve full-service community banking offices in Bucks, Montgomery, and Lehigh counties in southeastern Pennsylvania. QNB Corp. was founded in 1877 and is based in Quakertown, Pennsylvania.

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