Comparing State Street (NYSE:STT) & Independent Bank Group (NASDAQ:IBTX)

State Street (NYSE:STT) and Independent Bank Group (NASDAQ:IBTX) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for State Street and Independent Bank Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
State Street	1	8	3	0	2.17
Independent Bank Group	0	2	3	0	2.60

State Street currently has a consensus target price of $76.17, indicating a potential upside of 9.04%. Independent Bank Group has a consensus target price of $50.40, indicating a potential upside of 19.54%. Given Independent Bank Group’s stronger consensus rating and higher probable upside, analysts clearly believe Independent Bank Group is more favorable than State Street.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
State Street	16.99%	12.20%	0.94%
Independent Bank Group	10.68%	7.71%	0.99%

Earnings and Valuation

This table compares State Street and Independent Bank Group’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
State Street	$13.69 billion	1.63	$2.77 billion	$7.40	9.44
Independent Bank Group	$582.03 million	2.99	$196.29 million	$2.15	19.61

State Street has higher revenue and earnings than Independent Bank Group. State Street 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.

Volatility & Risk

State Street has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500. Comparatively, Independent Bank Group has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500.

Dividends

State Street pays an annual dividend of $2.52 per share and has a dividend yield of 3.6%. Independent Bank Group pays an annual dividend of $1.52 per share and has a dividend yield of 3.6%. State Street pays out 34.1% of its earnings in the form of a dividend. Independent Bank Group pays out 70.7% 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. State Street has increased its dividend for 12 consecutive years and Independent Bank Group has increased its dividend for 5 consecutive years. State Street is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

89.6% of State Street shares are owned by institutional investors. Comparatively, 74.7% of Independent Bank Group shares are owned by institutional investors. 0.3% of State Street shares are owned by insiders. Comparatively, 3.4% of Independent Bank Group 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.

Summary

State Street beats Independent Bank Group on 10 of the 16 factors compared between the two stocks.

About State Street

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody, accounting, regulatory reporting, investor, and performance and analytics; middle office products, such as IBOR, transaction management, loans, cash, derivatives and collateral, record keeping, and client reporting and investment analytics; foreign exchange, and brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded funds under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.

About Independent Bank Group

Independent Bank Group, Inc., through its subsidiary, Independent Bank provides various commercial banking products and services to businesses, professionals, and individuals in the United States. It accepts various deposit products, including checking and savings accounts, demand deposits, money market accounts, and certificates of deposit. The company also provides commercial real estate loans; commercial construction, land, and land development loans; residential real estate loans; single-family interim construction loans; commercial loans, such as SBA guaranteed loans, business term loans, equipment lease financing, lines of credit, and energy related loans; agricultural loans for farmers and ranchers; consumer installment loans comprising loans to purchase cars, boats, and other recreational vehicles; and residential mortgages, as well as mortgage warehouse purchase loans. In addition, it offers debit cards, online and mobile banking, estatement, bank-by-mail, and direct deposit services; and business accounts and management services consisting of analyzed business checking, business savings, and treasury management services. Independent Bank Group, Inc. was incorporated in 2002 and is headquartered in McKinney, Texas.