Critical Contrast: First Community (NASDAQ:FCCO) versus Eagle Bancorp Montana (NASDAQ:EBMT)

Eagle Bancorp Montana (NASDAQ:EBMT) and First Community (NASDAQ:FCCO) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Institutional & Insider Ownership

35.7% of Eagle Bancorp Montana shares are held by institutional investors. Comparatively, 61.3% of First Community shares are held by institutional investors. 6.7% of Eagle Bancorp Montana shares are held by company insiders. Comparatively, 3.0% of First Community shares are held 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.

Dividends

Eagle Bancorp Montana pays an annual dividend of $0.57 per share and has a dividend yield of 3.6%. First Community pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. Eagle Bancorp Montana pays out 50.9% of its earnings in the form of a dividend. First Community pays out 42.0% 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. Eagle Bancorp Montana has increased its dividend for 14 consecutive years. Eagle Bancorp Montana is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Eagle Bancorp Montana has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, First Community has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Eagle Bancorp Montana	7.06%	5.07%	0.41%
First Community	11.60%	8.33%	0.59%

Analyst Recommendations

This is a breakdown of current recommendations for Eagle Bancorp Montana and First Community, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Bancorp Montana	0	1	0	0	2.00
First Community	0	0	1	0	3.00

Eagle Bancorp Montana presently has a consensus price target of $13.50, suggesting a potential downside of 13.68%. First Community has a consensus price target of $21.00, suggesting a potential downside of 2.96%. Given First Community’s stronger consensus rating and higher probable upside, analysts plainly believe First Community is more favorable than Eagle Bancorp Montana.

Valuation and Earnings

This table compares Eagle Bancorp Montana and First Community”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Bancorp Montana	$79.91 million	1.57	$10.06 million	$1.12	13.96
First Community	$55.96 million	2.95	$11.84 million	$1.43	15.13

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

Summary

First Community beats Eagle Bancorp Montana on 12 of the 17 factors compared between the two stocks.

About Eagle Bancorp Montana

Eagle Bancorp Montana, Inc. operates as the bank holding company for Opportunity Bank of Montana that provides various retail banking products and services to small businesses and individuals in Montana. It accepts various deposit products, such as checking, savings, money market, and individual retirement accounts, as well as certificates of deposit accounts. The company also provides 1-4 family residential mortgage loans, such as residential mortgages and construction of residential properties; commercial real estate loans, including multi-family dwellings, nonresidential property, commercial construction and development, and farmland loans; and second mortgage/home equity loans. In addition, it offers consumer loans, such as loans secured by collateral other than real estate, such as automobiles, recreational vehicles, and boats; personal loans and lines of credit; commercial business loans consisting of business loans and lines of credit on a secured and unsecured basis; construction loans; agricultural loans; and mortgage loan services. The company operates full-service branches and automated teller machines. Eagle Bancorp Montana, Inc. was founded in 1922 and is headquartered in Helena, Montana.

About First Community

First Community Corporation operates as the bank holding company for First Community Bank that provides various commercial and retail banking products and services to small-to-medium sized businesses, professionals, and individuals. The company operates through Commercial and Retail Banking, Mortgage Banking, and Investment Advisory and Non-Deposit segments. Its deposit products include checking, NOW, savings, and individual retirement accounts; and demand deposits, as well as other time deposits, such as daily money market accounts and longer-term certificates of deposit. The company's loan portfolio comprises commercial loans that include secured and unsecured loans for working capital, business expansion, and the purchase of equipment and machinery; consumer loans, including secured and unsecured loans for financing automobiles, home improvements, education, and personal investments; real estate construction and acquisition loans; and fixed and variable rate mortgage loans. It also provides online banking, internet banking, cash management, safe deposit boxes, direct deposit of payroll and social security checks, and automatic drafts for various accounts. In addition, the company offers non-deposit investment products and other investment brokerage services; VISA and MasterCard credit card services; investment advisory services; and insurance services. The company was incorporated in 1994 and is headquartered in Lexington, South Carolina.