Reviewing Great Southern Bancorp (NASDAQ:GSBC) & Preferred Bank (NASDAQ:PFBC)

Great Southern Bancorp (NASDAQ:GSBC) and Preferred Bank (NASDAQ:PFBC) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Institutional and Insider Ownership

41.7% of Great Southern Bancorp shares are owned by institutional investors. Comparatively, 72.8% of Preferred Bank shares are owned by institutional investors. 27.6% of Great Southern Bancorp shares are owned by 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.

Dividends

Great Southern Bancorp pays an annual dividend of $1.60 per share and has a dividend yield of 3.0%. Preferred Bank pays an annual dividend of $2.80 per share and has a dividend yield of 3.5%. Great Southern Bancorp pays out 31.4% of its earnings in the form of a dividend. Preferred Bank pays out 27.0% 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. Preferred Bank has raised its dividend for 4 consecutive years. Preferred Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Great Southern Bancorp and Preferred Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Great Southern Bancorp	18.31%	10.97%	1.05%
Preferred Bank	28.70%	21.28%	2.18%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Great Southern Bancorp and Preferred Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Great Southern Bancorp	0	2	0	0	2.00
Preferred Bank	0	0	1	0	3.00

Great Southern Bancorp presently has a consensus target price of $57.50, suggesting a potential upside of 6.96%. Preferred Bank has a consensus target price of $67.00, suggesting a potential downside of 15.59%. Given Great Southern Bancorp’s higher probable upside, equities research analysts clearly believe Great Southern Bancorp is more favorable than Preferred Bank.

Risk and Volatility

Great Southern Bancorp has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500. Comparatively, Preferred Bank has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Earnings and Valuation

This table compares Great Southern Bancorp and Preferred Bank’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Great Southern Bancorp	$326.91 million	1.92	$67.80 million	$5.09	10.56
Preferred Bank	$485.10 million	2.36	$150.04 million	$10.36	7.66

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

Summary

Preferred Bank beats Great Southern Bancorp on 14 of the 17 factors compared between the two stocks.

About Great Southern Bancorp

Great Southern Bancorp, Inc. operates as a bank holding company for Great Southern Bank that provides a range of financial services in the United States. Its deposit products include regular savings accounts, checking accounts, money market accounts, fixed interest rate certificates with varying maturities, certificates of deposit, brokered certificates, and individual retirement accounts. The company's loan portfolio comprises residential and commercial real estate loans, commercial business loans, construction loans, home improvement loans, and unsecured consumer loans, as well as secured consumer loans, such as automobile loans, boat loans, home equity loans, and loans secured by savings deposits. It also provides insurance and merchant banking services. The company was founded in 1923 and is headquartered in Springfield, Missouri.

About Preferred Bank

Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals in the United States. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; and commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and SBA loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, and bills purchase programs. Further, it provides various high-wealth banking services to wealthy individuals residing in the Pacific Rim area; and remote deposit capture, bill pay, treasury management, and internet and mobile banking services. Additionally, the company offers various banking services to physicians, accountants, attorneys, business managers, and other professionals; and safe deposit boxes, account reconciliation, courier service, and cash management services to the manufacturing, service, and distribution companies. The company was incorporated in 1991 and is headquartered in Los Angeles, California.