Financial Analysis: Independent Bank Group (NASDAQ:IBTX) vs. Chemung Financial (NASDAQ:CHMG)

Independent Bank Group (NASDAQ:IBTX – Get Rating) and Chemung Financial (NASDAQ:CHMG – Get Rating) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Profitability

This table compares Independent Bank Group and Chemung Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank Group	27.78%	8.72%	1.16%
Chemung Financial	27.97%	16.74%	1.15%

Earnings & Valuation

This table compares Independent Bank Group and Chemung Financial’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank Group	$706.48 million	2.78	$196.29 million	$4.69	10.15
Chemung Financial	$102.91 million	2.00	$28.78 million	$6.13	7.19

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

Dividends

Independent Bank Group pays an annual dividend of $1.52 per share and has a dividend yield of 3.2%. Chemung Financial pays an annual dividend of $1.24 per share and has a dividend yield of 2.8%. Independent Bank Group pays out 32.4% of its earnings in the form of a dividend. Chemung Financial pays out 20.2% 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. Independent Bank Group has raised its dividend for 5 consecutive years. Independent Bank Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Independent Bank Group has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, Chemung Financial has a beta of 0.12, suggesting that its stock price is 88% less volatile than the S&P 500.

Insider & Institutional Ownership

75.8% of Independent Bank Group shares are owned by institutional investors. Comparatively, 35.9% of Chemung Financial shares are owned by institutional investors. 3.3% of Independent Bank Group shares are owned by company insiders. Comparatively, 12.3% of Chemung Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Independent Bank Group and Chemung Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank Group	0	1	3	0	2.75
Chemung Financial	0	1	0	0	2.00

Independent Bank Group presently has a consensus target price of $72.50, suggesting a potential upside of 52.25%. Chemung Financial has a consensus target price of $52.00, suggesting a potential upside of 18.05%. Given Independent Bank Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe Independent Bank Group is more favorable than Chemung Financial.

Summary

Independent Bank Group beats Chemung Financial on 12 of the 17 factors compared between the two stocks.

About Independent Bank Group

(Get Rating)

Independent Bank Group, Inc. is a bank holding company, which engages in the provision of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. It offers checking, savings, commercial loans, business services and cash management solutions. The company was founded by David R. Brooks in 1988 and is headquartered in McKinney, TX.

About Chemung Financial

(Get Rating)

Chemung Financial Corp. operates as a holding company. It operates through following segments: Core Banking and Wealth Management Services (WMG). The Core Banking segment attracts deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the local markets of the firm and to invest in securities. The WMG segment provides trust and investment advisory services to clients. The company was founded on January 2, 1985 and is headquartered in Elmira, NY.