Analyzing Texas Community Bancshares (NASDAQ:TCBS) and Flagstar Financial (NYSE:FLG)

Texas Community Bancshares (NASDAQ:TCBS) and Flagstar Financial (NYSE:FLG) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, risk, dividends, institutional ownership and profitability.

Institutional and Insider Ownership

15.8% of Texas Community Bancshares shares are held by institutional investors. Comparatively, 67.9% of Flagstar Financial shares are held by institutional investors. 19.1% of Texas Community Bancshares shares are held by company insiders. Comparatively, 6.4% of Flagstar Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Texas Community Bancshares and Flagstar Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Texas Community Bancshares	$10.93 million	4.51	-$730,000.00	($0.44)	-36.58
Flagstar Financial	$2.58 billion	1.66	-$1.09 billion	($3.69)	-2.81

Texas Community Bancshares has higher earnings, but lower revenue than Flagstar Financial. Texas Community Bancshares is trading at a lower price-to-earnings ratio than Flagstar Financial, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Texas Community Bancshares has a beta of 0.03, meaning that its stock price is 97% less volatile than the S&P 500. Comparatively, Flagstar Financial has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Dividends

Texas Community Bancshares pays an annual dividend of $0.16 per share and has a dividend yield of 1.0%. Flagstar Financial pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. Texas Community Bancshares pays out -36.4% of its earnings in the form of a dividend. Flagstar Financial pays out -1.1% 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. Texas Community Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Texas Community Bancshares and Flagstar Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Texas Community Bancshares	-10.81%	-4.11%	-0.48%
Flagstar Financial	-17.16%	-10.72%	-0.76%

Analyst Ratings

This is a breakdown of recent ratings for Texas Community Bancshares and Flagstar Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Texas Community Bancshares	0	0	0	0	0.00
Flagstar Financial	0	3	3	0	2.50

Flagstar Financial has a consensus price target of $13.25, suggesting a potential upside of 27.77%. Given Flagstar Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Flagstar Financial is more favorable than Texas Community Bancshares.

Summary

Texas Community Bancshares beats Flagstar Financial on 9 of the 16 factors compared between the two stocks.

About Texas Community Bancshares

Texas Community Bancshares, Inc. operates as the bank holding company for Mineola Community Bank, S.S.B. that provides loans and banking services to consumers and commercial customers in Mineola, Texas and the surrounding area, and the Dallas Fort Worth Metroplex. It generates a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit, and individual retirement accounts. The company also originates primarily one- to four-family residential mortgage loans, commercial real estate loans, and construction and land loans; and car, boat, share, unsecured loans, etc., as well as agricultural loans, commercial loans, and consumer and other loans. In addition, it invests in securities; and offers sweep account, safe deposit boxes, e-statement, cards, online banking, and mobile banking services. Texas Community Bancshares, Inc. was founded in 1934 and is headquartered in Mineola, Texas.

About Flagstar Financial

Flagstar Financial, Inc. operates as the bank holding company for Flagstar Bank, N.A. that provides banking products and services in the United States. The company’s deposit products include interest-bearing checking and money market, savings, non-interest-bearing, and retirement accounts, as well as certificates of deposit. Its loan products comprise multi-family loans; commercial real estate loans; acquisition, development, and construction loans; commercial and industrial loans; one-to-four family loans; specialty finance loans and leases; warehouse loans; and other loans, such as home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans, and other consumer loans, including overdraft loans. The company offers cash management products; non-deposit investment and insurance products; and online banking, mobile banking, and bank-by-phone services. It primarily serves individuals, small and mid-size businesses, and professional associations. The company was formerly known as New York Community Bancorp, Inc. and changed its name to Flagstar Financial, Inc. in October 2024. Flagstar Financial, Inc. was founded in 1859 and is headquartered in Hicksville, New York.