Enterprise Financial Services (NASDAQ:EFSC – Get Free Report) and 1st Source (NASDAQ:SRCE – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, risk, dividends, valuation and earnings.
Volatility and Risk
Enterprise Financial Services has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Enterprise Financial Services and 1st Source, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Enterprise Financial Services | 0 | 1 | 3 | 0 | 2.75 |
| 1st Source | 0 | 3 | 2 | 0 | 2.40 |
Earnings & Valuation
This table compares Enterprise Financial Services and 1st Source”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Enterprise Financial Services | $593.12 million | 3.34 | $185.27 million | $5.14 | 10.40 |
| 1st Source | $420.79 million | 3.57 | $132.62 million | $6.01 | 10.22 |
Enterprise Financial Services has higher revenue and earnings than 1st Source. 1st Source is trading at a lower price-to-earnings ratio than Enterprise Financial Services, indicating that it is currently the more affordable of the two stocks.
Dividends
Enterprise Financial Services pays an annual dividend of $1.28 per share and has a dividend yield of 2.4%. 1st Source pays an annual dividend of $1.60 per share and has a dividend yield of 2.6%. Enterprise Financial Services pays out 24.9% of its earnings in the form of a dividend. 1st Source pays out 26.6% 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 11 consecutive years and 1st Source has increased its dividend for 38 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Enterprise Financial Services and 1st Source’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Enterprise Financial Services | 19.98% | 10.98% | 1.25% |
| 1st Source | 24.97% | 12.25% | 1.68% |
Institutional and Insider Ownership
72.2% of Enterprise Financial Services shares are owned by institutional investors. Comparatively, 74.4% of 1st Source shares are owned by institutional investors. 2.3% of Enterprise Financial Services shares are owned by insiders. Comparatively, 19.5% of 1st Source shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Summary
1st Source beats Enterprise Financial Services on 9 of the 17 factors compared between the two stocks.
About Enterprise Financial Services
Enterprise Financial Services Corp operates as the holding company for Enterprise Bank & Trust that offers banking and wealth management services to individuals and corporate customers primarily in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico. It provides checking, savings, money market accounts, and certificates of deposit. The company also provides commercial and industrial, commercial real estate, real estate construction and development, residential real estate, small business administration, agricultural, consumer, and other loan products. In addition, it offers treasury management and international trade services; tax credit brokerage services; life insurance premium and sponsor finance; tax credit related lending; other deposit accounts, such as community associations, property management, third party escrow, and trust services; treasury management product and services; customized solutions and products; cash management; fiduciary, investment management, and financial advisory services; and customer hedging products, including international banking, card services, and tax credit businesses. Further, the company provides online, device applications, text, and voice banking; remote deposit capture; internet banking, mobile banking, cash management, positive pay services, fraud detection and prevention, automated payables, check image, and statement and document imaging; and controlled disbursements, repurchase agreements, and sweep investment accounts. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.
About 1st Source
1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.
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