Contrasting Stock Yards Bancorp (SYBT) & First Business Financial Services (FBIZ)

First Business Financial Services (NASDAQ: FBIZ) and Stock Yards Bancorp (NASDAQ:SYBT) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for First Business Financial Services and Stock Yards Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Business Financial Services 0 3 0 0 2.00
Stock Yards Bancorp 0 1 0 0 2.00

First Business Financial Services currently has a consensus price target of $24.50, suggesting a potential upside of 8.55%. Stock Yards Bancorp has a consensus price target of $38.00, suggesting a potential downside of 3.92%. Given First Business Financial Services’ higher probable upside, research analysts clearly believe First Business Financial Services is more favorable than Stock Yards Bancorp.

Profitability

This table compares First Business Financial Services and Stock Yards Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Business Financial Services 12.63% 7.23% 0.66%
Stock Yards Bancorp 28.57% 13.66% 1.43%

Insider & Institutional Ownership

60.1% of First Business Financial Services shares are owned by institutional investors. Comparatively, 48.1% of Stock Yards Bancorp shares are owned by institutional investors. 8.3% of First Business Financial Services shares are owned by company insiders. Comparatively, 6.2% of Stock Yards Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

First Business Financial Services pays an annual dividend of $0.52 per share and has a dividend yield of 2.3%. Stock Yards Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.0%. First Business Financial Services pays out 38.0% of its earnings in the form of a dividend. Stock Yards Bancorp pays out 42.1% 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. First Business Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

First Business Financial Services has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Stock Yards Bancorp has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Valuation and Earnings

This table compares First Business Financial Services and Stock Yards Bancorp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Business Financial Services $66.32 million 2.97 $11.94 million $1.37 16.47
Stock Yards Bancorp $138.14 million 6.49 $43.05 million $1.90 20.82

Stock Yards Bancorp has higher revenue and earnings than First Business Financial Services. First Business Financial Services is trading at a lower price-to-earnings ratio than Stock Yards Bancorp, indicating that it is currently the more affordable of the two stocks.

Summary

Stock Yards Bancorp beats First Business Financial Services on 8 of the 14 factors compared between the two stocks.

First Business Financial Services Company Profile

First Business Financial Services, Inc. (FBFS) is a bank holding company. The Company engages in the commercial banking business through its bank subsidiaries, which include First Business Bank (FBB), First Business Bank-Milwaukee (FBB-Milwaukee) and Alterra Bank (Alterra) (FBB and FBB-Milwaukee and, together with FBB, the Banks). The operations of FBFS are conducted through the Banks and certain subsidiaries of FBB. The Banks operate as business banks focusing on delivering a line of commercial banking products, including commercial loans and commercial real estate loans, and services to meet the needs of small- and medium-sized businesses, business owners, executives, professionals and high net worth individuals. Its business lines include commercial lending, asset-based financing, equipment financing, small business administration (SBA) lending, treasury management services, and trust and investment services. Its investments include short-term investments and securities.

Stock Yards Bancorp Company Profile

Stock Yards Bancorp, Inc. is the holding company for Stock Yards Bank & Trust Company (the Bank). The Bank is a state chartered bank. The Company operates through two segments: commercial banking, and wealth management and trust. The commercial banking segment provides a full range of loan and deposit products to individual consumers and businesses, plus origination of consumer mortgages and securities brokerage activity. The wealth management and trust segment provides investment management, trust and estate administration, and retirement plan services. The Bank provides commercial and personal banking services in the Louisville, Kentucky, Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets through 37 full service banking offices, as of December 31, 2016. The Bank also originates and sells single-family residential mortgages. Additionally, the Bank offers securities brokerage services via its branch network through an arrangement with a third party broker-dealer.

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