Analyzing South Plains Financial (NASDAQ:SPFI) and German American Bancorp (NASDAQ:GABC)

South Plains Financial (NASDAQ:SPFI) and German American Bancorp (NASDAQ:GABC) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for South Plains Financial and German American Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Plains Financial	0	0	4	0	3.00
German American Bancorp	0	2	3	0	2.60

South Plains Financial currently has a consensus price target of $41.50, indicating a potential upside of 19.25%. German American Bancorp has a consensus price target of $45.20, indicating a potential upside of 19.26%. Given German American Bancorp’s higher probable upside, analysts clearly believe German American Bancorp is more favorable than South Plains Financial.

Dividends

South Plains Financial pays an annual dividend of $0.60 per share and has a dividend yield of 1.7%. German American Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 3.1%. South Plains Financial pays out 20.0% of its earnings in the form of a dividend. German American Bancorp pays out 46.8% 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. South Plains Financial has increased its dividend for 5 consecutive years and German American Bancorp has increased its dividend for 13 consecutive years. German American Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares South Plains Financial and German American Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Plains Financial	$191.62 million	2.95	$49.72 million	$3.00	11.60
German American Bancorp	$235.52 million	6.03	$83.81 million	$2.48	15.28

German American Bancorp has higher revenue and earnings than South Plains Financial. South Plains Financial is trading at a lower price-to-earnings ratio than German American Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares South Plains Financial and German American Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Plains Financial	17.20%	11.75%	1.17%
German American Bancorp	23.69%	12.04%	1.35%

Risk & Volatility

South Plains Financial has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, German American Bancorp has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Insider and Institutional Ownership

55.0% of South Plains Financial shares are held by institutional investors. Comparatively, 46.9% of German American Bancorp shares are held by institutional investors. 24.6% of South Plains Financial shares are held by insiders. Comparatively, 6.2% of German American Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

German American Bancorp beats South Plains Financial on 10 of the 17 factors compared between the two stocks.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, Texas.

About German American Bancorp

German American Bancorp, Inc. operates as a financial holding company for German American Bank that provides retail and commercial banking services. The company operates through three segments: Core Banking, Wealth Management Services, and Insurance Operations. The Core Banking segment accepts deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Wealth Management segment provides trust, investment advisory, brokerage, and retirement planning services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. It also offers checking, saving, and individual retirement accounts; certificates of deposit; wire transfer; credit cards; home equity, mortgages, and small business; treasury management; and online and mobile banking, bill pay, digital wallet, mobile check deposit, credit score and report, money management, and estatements, as well as wealth advisory. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.