Critical Comparison: Macatawa Bank (NASDAQ:MCBC) versus Enterprise Financial Services (NASDAQ:EFSC)

Enterprise Financial Services (NASDAQ:EFSCGet Rating) and Macatawa Bank (NASDAQ:MCBCGet Rating) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Profitability

This table compares Enterprise Financial Services and Macatawa Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enterprise Financial Services 31.42% 13.65% 1.46%
Macatawa Bank 34.64% 10.89% 0.93%

Valuation and Earnings

This table compares Enterprise Financial Services and Macatawa Bank’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enterprise Financial Services $450.97 million 3.83 $133.05 million $4.17 11.11
Macatawa Bank $82.33 million 3.84 $29.01 million $0.80 11.54

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

Dividends

Enterprise Financial Services pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Macatawa Bank pays an annual dividend of $0.32 per share and has a dividend yield of 3.5%. Enterprise Financial Services pays out 20.1% of its earnings in the form of a dividend. Macatawa Bank pays out 40.0% 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. Enterprise Financial Services has increased its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations for Enterprise Financial Services and Macatawa Bank, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enterprise Financial Services 0 0 2 0 3.00
Macatawa Bank 0 0 0 0 N/A

Enterprise Financial Services presently has a consensus price target of $58.00, suggesting a potential upside of 25.19%. Given Enterprise Financial Services’ higher possible upside, research analysts plainly believe Enterprise Financial Services is more favorable than Macatawa Bank.

Institutional and Insider Ownership

67.1% of Enterprise Financial Services shares are owned by institutional investors. Comparatively, 38.5% of Macatawa Bank shares are owned by institutional investors. 5.9% of Enterprise Financial Services shares are owned by company insiders. Comparatively, 8.4% of Macatawa Bank shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Enterprise Financial Services has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, Macatawa Bank has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Summary

Enterprise Financial Services beats Macatawa Bank on 11 of the 16 factors compared between the two stocks.

Enterprise Financial Services Company Profile (Get Rating)

Enterprise Financial Services Corp operates as the financial holding company for Enterprise Bank & Trust that offers banking and wealth management services to individuals and corporate customers. The company offers checking, savings, and money market accounts, and certificates of deposit. It also provides commercial and industrial, commercial real estate, construction and land development, residential real estate, agricultural, and consumer loans. In addition, the company offers treasury management and international trade services; tax credit brokerage services consisting of the acquisition of tax credits and sale of these tax credits to clients; and financial and estate planning, investment management, and trust services to businesses, individuals, institutions, retirement plans, and non-profit organizations. Further, it offers fiduciary, financial advisory, and merchant processing services; and debit and credit cards. Additionally, the company provides international banking, insurance, internet and mobile banking, remote deposit capture, positive pay, fraud detection and prevention, automated payable, check imaging, and statement and document imaging services; and cash management products, controlled disbursements, repurchase agreements, and sweep investment accounts. It operates banking locations and administrative offices in Arizona, California, Kansas, Missouri, Nevada, and New Mexico market areas, as well as a network of SBA loan production offices and deposit production offices in various states. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.

Macatawa Bank Company Profile (Get Rating)

Macatawa Bank Corporation operates as the bank holding company for Macatawa Bank that provides commercial and consumer banking and trust services. The company accepts various deposits, such as checking accounts, savings accounts, time deposits, regular and money market savings accounts, certificates of deposit, and demand deposits. Its loan products include commercial and industrial loans comprising loans to finance operations and equipment; commercial real estate loans, which consist of construction and development, multi-family, and other non-residential real estate loans; and residential mortgage loans, as well as consumer loans, including automobile loans, home equity lines of credit and installment loans, home improvement loans, deposit account loans, and other loans for household and personal purposes. The company also offers ATM and debit card processing, cash management, trust, and brokerage services. In addition, it provides fraud protection; collection services; disbursement solutions; fund management; and investment and retirement plan services. It serves individuals, businesses, associations, churches, nonprofit organizations, financial institutions, and government authorities. As of December 31, 2021, the company had 26 full-service branches in Kent, Ottawa, and northern Allegan counties, Michigan. Macatawa Bank Corporation was incorporated in 1997 and is based in Holland, Michigan.

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