Horizon Bancorp (HBNC) and 1st Source (SRCE) Financial Comparison

Horizon Bancorp (NASDAQ: HBNC) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, analyst recommendations, institutional ownership, earnings, dividends and risk.

Institutional and Insider Ownership

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48.7% of Horizon Bancorp shares are owned by institutional investors. Comparatively, 68.6% of 1st Source shares are owned by institutional investors. 4.6% of Horizon Bancorp shares are owned by insiders. Comparatively, 19.9% of 1st Source shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Horizon Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 2.0%. 1st Source pays an annual dividend of $0.88 per share and has a dividend yield of 1.7%. Horizon Bancorp pays out 39.2% of its earnings in the form of a dividend. 1st Source pays out 35.2% 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. 1st Source has raised its dividend for 32 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations for Horizon Bancorp and 1st Source, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Horizon Bancorp 0 1 2 0 2.67
1st Source 0 2 1 0 2.33

Horizon Bancorp presently has a consensus price target of $31.17, suggesting a potential upside of 6.19%. 1st Source has a consensus price target of $55.00, suggesting a potential upside of 8.82%. Given 1st Source’s higher probable upside, analysts plainly believe 1st Source is more favorable than Horizon Bancorp.

Volatility & Risk

Horizon Bancorp has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, 1st Source has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Earnings & Valuation

This table compares Horizon Bancorp and 1st Source’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Horizon Bancorp $161.62 million 4.64 $33.11 million $1.53 19.18
1st Source $311.09 million 4.37 $68.05 million $2.50 20.22

1st Source has higher revenue and earnings than Horizon Bancorp. Horizon Bancorp is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Horizon Bancorp and 1st Source’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Horizon Bancorp 20.49% 9.28% 1.03%
1st Source 21.88% 9.30% 1.14%

Summary

1st Source beats Horizon Bancorp on 13 of the 17 factors compared between the two stocks.

About Horizon Bancorp

Horizon Bancorp is a bank holding company. The Company provides a range of banking services in Northern and Central Indiana and Southwestern and Central Michigan through its bank subsidiary, Horizon Bank, N.A. (the Bank) and other affiliated entities and Horizon Risk Management, Inc. The Company operates through commercial banking segment. The Bank is a full-service commercial bank offering commercial and retail banking services, corporate and individual trust and agency services and other services incident to banking. Horizon Risk Management, Inc. is a captive insurance company. LSB Risk Management, Inc. is a captive insurance company. As of September 1, 2017, the Bank operated through 60 offices throughout northern and central Indiana and southern Michigan and Ohio. The Bank’s loan portfolio consists of commercial loans, real estate loans, mortgage warehouse loans and consumer loans.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and investment management services, and insurance to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate loans, and lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides a range of trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for new and used aircraft, auto and light trucks, construction equipment, and medium and heavy duty trucks; and leases construction equipment, various types of trucks, vans, automobiles, motor coaches, shuttle buses, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services; and investment advisory services to trust and investment clients. As of December 31, 2017, the company operated through 79 banking centers in 17 counties in Indiana and Michigan, and Sarasota County in Florida. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

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