Reviewing Sierra Bancorp (NASDAQ:BSRR) and Banner (NASDAQ:BANR)

Sierra Bancorp (NASDAQ:BSRR) and Banner (NASDAQ:BANR) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, earnings, analyst recommendations and valuation.

Institutional & Insider Ownership

55.4% of Sierra Bancorp shares are owned by institutional investors. Comparatively, 87.3% of Banner shares are owned by institutional investors. 11.6% of Sierra Bancorp shares are owned by insiders. Comparatively, 1.6% of Banner shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Sierra Bancorp and Banner, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	2	0	0	2.00
Banner	0	2	3	0	2.60

Sierra Bancorp presently has a consensus price target of $23.00, suggesting a potential upside of 2.95%. Banner has a consensus price target of $51.20, suggesting a potential upside of 5.85%. Given Banner’s stronger consensus rating and higher possible upside, analysts clearly believe Banner is more favorable than Sierra Bancorp.

Dividends

Sierra Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 4.1%. Banner pays an annual dividend of $1.92 per share and has a dividend yield of 4.0%. Sierra Bancorp pays out 38.0% of its earnings in the form of a dividend. Banner pays out 39.9% 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. Sierra Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Sierra Bancorp and Banner’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	17.80%	10.89%	0.96%
Banner	21.62%	11.47%	1.17%

Risk and Volatility

Sierra Bancorp has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Banner has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.

Valuation and Earnings

This table compares Sierra Bancorp and Banner’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sierra Bancorp	$120.46 million	2.71	$34.84 million	$2.42	9.23
Banner	$745.98 million	2.23	$183.62 million	$4.81	10.06

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

Summary

Banner beats Sierra Bancorp on 12 of the 16 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

About Banner

Banner Corporation operates as the bank holding company for Banner Bank that engages in the provision of commercial banking and financial products and services to individuals, businesses, and public sector entities in the United States. It accepts various deposit instruments, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, regular savings accounts, and certificates of deposit, as well as treasury management services and retirement savings plans. The company also provides commercial real estate loans, including owner-occupied, investment properties, and multifamily residential real estate loans; construction, land, and land development loans; one- to four-family residential real estate lending; commercial business loans; agricultural loans; consumer and other loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts; and small business administration loans. In addition, it provides electronic and digital banking services comprising debit cards and ATMs, internet banking, remote deposit, and mobile banking services. The company was founded in 1890 and is based in Walla Walla, Washington.