Critical Review: Shore Community Bank (OTCMKTS:SHRC) versus Bank of America (OTCMKTS:BAC)

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Shore Community Bank (OTCMKTS:SHRC) and Bank of America (NYSE:BAC) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Dividends

Shore Community Bank pays an annual dividend of $0.30 per share and has a dividend yield of 1.9%. Bank of America pays an annual dividend of $0.60 per share and has a dividend yield of 2.3%. Bank of America pays out 23.0% of its earnings in the form of a dividend. Bank of America has raised its dividend for 5 consecutive years. Bank of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Shore Community Bank and Bank of America, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shore Community Bank 0 0 0 0 N/A
Bank of America 0 8 10 0 2.56

Bank of America has a consensus price target of $32.95, suggesting a potential upside of 25.53%. Given Bank of America’s higher possible upside, analysts plainly believe Bank of America is more favorable than Shore Community Bank.

Profitability

This table compares Shore Community Bank and Bank of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shore Community Bank N/A N/A N/A
Bank of America 25.52% 11.95% 1.23%

Insider and Institutional Ownership

69.5% of Bank of America shares are owned by institutional investors. 0.2% of Bank of America shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Shore Community Bank has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, Bank of America has a beta of 1.54, indicating that its share price is 54% more volatile than the S&P 500.

Valuation and Earnings

This table compares Shore Community Bank and Bank of America’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shore Community Bank N/A N/A $1.73 million N/A N/A
Bank of America $110.58 billion 2.21 $28.15 billion $2.61 10.06

Bank of America has higher revenue and earnings than Shore Community Bank.

Summary

Bank of America beats Shore Community Bank on 12 of the 13 factors compared between the two stocks.

Shore Community Bank Company Profile

Shore Community Bank, a state chartered bank, provides banking products and services to businesses and individuals in Ocean County, New Jersey. The company's deposit products include checking accounts, savings accounts, certificates of deposit, individual retirement accounts, money market accounts, visa/mastercard merchant deposit accounts, and payroll/direct deposit accounts. Its loan portfolio comprises personal, home equity, term, and demand loans; lines of credit; letters of credit; commercial mortgages; and construction lending. The company also offers direct deposit and electronic transfer, wire transfer, ACH origination, night depository, tenant rent security, signature guarantee, remote deposit, notary, and automated asset management services; safe deposit boxes, escrow accounts, and debit cards, as well as online and telephone banking services. As of April 28, 2016, it operated five banking offices located in Toms River, Jackson, and Manahawkin, New Jersey. Shore Community Bank was incorporated in 1996 and is headquartered in Toms River, New Jersey.

Bank of America Company Profile

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small- and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates through four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, CDs and IRAs, noninterest- and interest-bearing checking accounts, and investment accounts and products; and credit and debit cards, residential mortgages, and home equity loans, as well as direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. This segment provides its products and services through approximately 4,300 financial centers; 16,300 ATMs; call centers; and digital banking platforms. The GWIM segment offers investment management, brokerage, banking, and trust and retirement products; and wealth management solutions targeted to high net worth and ultra high net worth clients, as well as customized solutions to meet clients' wealth structuring, investment management, and trust and banking needs, including specialty asset management services. The Global Banking segment provides lending products and services, including commercial loans, leases, commitment facilities, trade finance, and real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, and short-term investing options; working capital management solutions; and debt and equity underwriting and distribution, and merger-related and other advisory services. The Global Markets segment offers market-making, financing, securities clearing, settlement, and custody services, as well as risk management, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1874 and is headquartered in Charlotte, North Carolina.

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