Financial Comparison: Burke & Herbert Financial Services (NASDAQ:BHRB) versus First Bancshares (NASDAQ:FBMS)

First Bancshares (NASDAQ:FBMS) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Institutional and Insider Ownership

69.9% of First Bancshares shares are held by institutional investors. 3.5% of First Bancshares shares are held by insiders. Comparatively, 9.7% of Burke & Herbert Financial Services shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares First Bancshares and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Bancshares	18.71%	8.82%	1.05%
Burke & Herbert Financial Services	-1.10%	9.96%	0.85%

Dividends

First Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. Burke & Herbert Financial Services pays an annual dividend of $2.12 per share and has a dividend yield of 3.3%. First Bancshares pays out 39.7% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 26.0% 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. Burke & Herbert Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for First Bancshares and Burke & Herbert Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bancshares	0	1	2	0	2.67
Burke & Herbert Financial Services	0	1	0	0	2.00

First Bancshares presently has a consensus price target of $35.50, indicating a potential upside of 8.33%. Burke & Herbert Financial Services has a consensus price target of $73.00, indicating a potential upside of 12.07%. Given Burke & Herbert Financial Services’ higher probable upside, analysts clearly believe Burke & Herbert Financial Services is more favorable than First Bancshares.

Earnings and Valuation

This table compares First Bancshares and Burke & Herbert Financial Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bancshares	$275.82 million	3.71	$75.46 million	$2.52	13.00
Burke & Herbert Financial Services	$148.44 million	6.52	$22.69 million	$8.15	7.99

First Bancshares has higher revenue and earnings than Burke & Herbert Financial Services. Burke & Herbert Financial Services 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

First Bancshares beats Burke & Herbert Financial Services on 8 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 Burke & Herbert Financial Services

Burke & Herbert Financial Services Corp. operates as the bank holding company for Burke & Herbert Bank & Trust Company that provides various community banking products and services in Virginia and Maryland. It offers consumer and commercial deposit products, such as digital banking, demand, negotiable order of withdrawal, money market, and savings accounts, as well as certificates of deposit. The company also provides loans, such as commercial real estate, single family residential, owner-occupied commercial real estate, residential mortgage, acquisition, construction and development, commercial and industrial, and consumer non-real estate and other loans. In addition, it offers treasury and cash management services; and online and mobile banking, and wealth and trust services. The company was founded in 1852 and is headquartered in Alexandria, Virginia.