Contrasting Security Federal (OTCMKTS:SFDL) and Bank7 (NASDAQ:BSVN)

Bank7 (NASDAQ:BSVN) and Security Federal (OTCMKTS:SFDL) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Institutional & Insider Ownership

23.5% of Bank7 shares are held by institutional investors. 25.8% of Bank7 shares are held by insiders. Comparatively, 36.4% of Security Federal shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for Bank7 and Security Federal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank7	0	1	3	0	2.75
Security Federal	0	0	0	0	0.00

Bank7 currently has a consensus target price of $54.00, indicating a potential upside of 20.59%. Given Bank7’s stronger consensus rating and higher possible upside, research analysts plainly believe Bank7 is more favorable than Security Federal.

Valuation and Earnings

This table compares Bank7 and Security Federal”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank7	$142.79 million	2.96	$45.70 million	$4.53	9.89
Security Federal	$87.55 million	1.14	$9.81 million	$3.51	9.09

Bank7 has higher revenue and earnings than Security Federal. Security Federal is trading at a lower price-to-earnings ratio than Bank7, indicating that it is currently the more affordable of the two stocks.

Dividends

Bank7 pays an annual dividend of $1.08 per share and has a dividend yield of 2.4%. Security Federal pays an annual dividend of $0.60 per share and has a dividend yield of 1.9%. Bank7 pays out 23.8% of its earnings in the form of a dividend. Security Federal pays out 17.1% 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. Bank7 has increased its dividend for 5 consecutive years. Bank7 is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Bank7 has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500. Comparatively, Security Federal has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Profitability

This table compares Bank7 and Security Federal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank7	31.60%	19.11%	2.39%
Security Federal	14.29%	12.05%	0.80%

Summary

Bank7 beats Security Federal on 15 of the 17 factors compared between the two stocks.

About Bank7

Bank7 Corp. operates as a bank holding company for Bank7 that provides banking and financial services to individual and corporate customers. It offers commercial deposit, commercial checking, money market, and other deposit accounts; and retail deposit services, such as certificates of deposit, money market accounts, checking accounts, negotiable order of withdrawal accounts, savings accounts, and automated teller machine access. The company also provides commercial real estate, hospitality, energy, and commercial and industrial lending services; consumer lending services to individuals for personal and household purposes comprising residential real estate loans and mortgage banking services, personal lines of credit, loans for the purchase of automobiles, and other installment loans, as well as secured and unsecured term loans and home improvement loans. It operates through a network of full-service branches in Oklahoma, the Dallas/Fort Worth, Texas metropolitan area, and Kansas. The company was formerly known as Haines Financial Corp. Bank7 Corp. was founded in 1901 and is headquartered in Oklahoma City, Oklahoma.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.