Franklin Financial Services (NASDAQ:FRAF) vs. Independent Bank (NASDAQ:IBCP) Critical Survey

Independent Bank (NASDAQ:IBCPGet Free Report) and Franklin Financial Services (NASDAQ:FRAFGet Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Valuation and Earnings

This table compares Independent Bank and Franklin Financial Services”s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Independent Bank $203.04 million 3.85 $59.07 million $2.94 12.71
Franklin Financial Services $91.61 million 1.58 $13.60 million $3.17 10.33

Independent Bank has higher revenue and earnings than Franklin Financial Services. Franklin Financial Services is trading at a lower price-to-earnings ratio than Independent Bank, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Independent Bank and Franklin Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Independent Bank 19.93% 15.26% 1.24%
Franklin Financial Services 12.40% 10.48% 0.72%

Institutional & Insider Ownership

79.4% of Independent Bank shares are held by institutional investors. Comparatively, 24.8% of Franklin Financial Services shares are held by institutional investors. 5.5% of Independent Bank shares are held by company insiders. Comparatively, 6.9% of Franklin Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Independent Bank has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500. Comparatively, Franklin Financial Services has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Independent Bank and Franklin Financial Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independent Bank 0 4 0 0 2.00
Franklin Financial Services 0 0 0 0 0.00

Independent Bank currently has a consensus target price of $32.17, indicating a potential downside of 13.95%. Given Independent Bank’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Independent Bank is more favorable than Franklin Financial Services.

Dividends

Independent Bank pays an annual dividend of $0.96 per share and has a dividend yield of 2.6%. Franklin Financial Services pays an annual dividend of $1.28 per share and has a dividend yield of 3.9%. Independent Bank pays out 32.7% of its earnings in the form of a dividend. Franklin Financial Services pays out 40.4% 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.

Summary

Independent Bank beats Franklin Financial Services on 12 of the 15 factors compared between the two stocks.

About Independent Bank

(Get Free Report)

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

About Franklin Financial Services

(Get Free Report)

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.

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