Provident Financial Services Inc (PFS) stock analysis

P/E below its 5-year median

Provident Financial Services's P/E of 9.7 is below its own 5-year median of 10.2.

P/E below the industry

Provident Financial Services's P/E of 9.7 is below the Savings Institutions median of 13.7.

P/S above the industry

Provident Financial Services's price-to-sales of 38.98 is above the Savings Institutions median of 3.77.

P/B above the industry

Provident Financial Services's price-to-book of 1.05 is above the Savings Institutions median of 1.04.

Trading below fair value

The share price of $23.04 is below our fair value estimate of $25.16.

Margin of safety under 20%

The price is 8.4% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 10.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -1.7% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 21.0% over the last twelve months, against a 5-year average of 24.6% a year.

Growing slower than the industry

Revenue grew 7.9% over the last twelve months; the Savings Institutions median is 9.0%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity under 15%

Return on equity was 11.0% over the last twelve months and averaged 8.9% over five years; we look for 15% on both.

Return on assets over 1%

Return on assets was 1.2%; for a bank or insurer, 1% or more is considered good.

Return on equity above the industry

Provident Financial Services's return on equity of 11.0% is above the Savings Institutions median of 6.1%.

Earnings grew over 5 years

Net income grew 24.6% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 402% over the last twelve months, against a 5-year average of 280%.

Net margin above the industry

Provident Financial Services's net margin of 402% is above the Savings Institutions median of 20.3%.

Well capitalized

Equity is 11.1% of total assets; 8% or more is a comfortable cushion.

Loans exceed deposits

Loans equal 101% of deposits, so the bank relies on other borrowing.

Thin loan-loss reserve

The allowance for credit losses is 0.9% of loans; we look for at least 1%.

Efficient operations

Non-interest expense takes 53.2% of revenue; under 60% is efficient for a bank.

Deposits growing

Deposits grew 3.7% over the past year.

Borrowings

Needs debt and equity figures.

Pays a dividend

Provident Financial Services paid dividends worth 4.2% of the share price over the last twelve months.

Yield below Treasuries

The 4.2% yield is below the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 3.8% or more; Provident Financial Services yields 4.2%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 9 fiscal years.

Covered by earnings

Dividends take 40.1% of net income.

Covered by free cash flow

Dividends take 41.2% of free cash flow.