Southside Bancshares (NASDAQ:SBSI) and Stock Yards Bancorp (NASDAQ:SYBT) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Profitability

This table compares Southside Bancshares and Stock Yards Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southside Bancshares 24.55% 9.07% 1.04%
Stock Yards Bancorp 26.61% 14.66% 1.52%

Risk & Volatility

Southside Bancshares has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Stock Yards Bancorp has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Valuation & Earnings

This table compares Southside Bancshares and Stock Yards Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southside Bancshares $224.95 million 5.07 $54.31 million $1.89 17.19
Stock Yards Bancorp $155.97 million 4.91 $38.04 million $1.91 17.62

Southside Bancshares has higher revenue and earnings than Stock Yards Bancorp. Southside Bancshares is trading at a lower price-to-earnings ratio than Stock Yards Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

Southside Bancshares pays an annual dividend of $1.20 per share and has a dividend yield of 3.7%. Stock Yards Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.0%. Southside Bancshares pays out 63.5% of its earnings in the form of a dividend. Stock Yards Bancorp pays out 52.4% 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. Southside Bancshares has increased its dividend for 20 consecutive years and Stock Yards Bancorp has increased its dividend for 6 consecutive years. Southside Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Southside Bancshares and Stock Yards Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southside Bancshares 0 1 0 0 2.00
Stock Yards Bancorp 0 1 1 0 2.50

Southside Bancshares currently has a consensus target price of $37.00, suggesting a potential upside of 13.88%. Stock Yards Bancorp has a consensus target price of $40.00, suggesting a potential upside of 18.87%. Given Stock Yards Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Stock Yards Bancorp is more favorable than Southside Bancshares.

Insider and Institutional Ownership

47.1% of Southside Bancshares shares are held by institutional investors. Comparatively, 47.6% of Stock Yards Bancorp shares are held by institutional investors. 6.1% of Southside Bancshares shares are held by insiders. Comparatively, 8.4% of Stock Yards Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Stock Yards Bancorp beats Southside Bancshares on 11 of the 17 factors compared between the two stocks.

Southside Bancshares Company Profile

Southside Bancshares, Inc. operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations. Its deposit products include savings, money market, and interest and noninterest bearing checking accounts, as well as certificates of deposit. The company's loan portfolio comprises consumer loans that include 1-4 family residential loans, home equity loans, home improvement loans, automobile loans, and other installment loans; commercial loans, such as short-term working capital loans for inventory and accounts receivable, short and medium-term loans for equipment or other business capital expansion, commercial real estate loans, and municipal loans; and construction loans for 1-4 family residential and commercial real estate. It also offers trust services consisting of investment management, administration, and advisory services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. The company operates through 60 branches and 40 motor bank facilities located in Tyler, Longview, Lindale, Gresham, Jacksonville, Bullard, Chandler, Hawkins, Palestine, Gun Barrel City, Whitehouse, Fort Worth, Arlington, Cleburne, Euless, Flower Mound, Frisco, Granbury, Grapevine, Irving, Watauga, Weatherford, Austin, Diboll, Lufkin, Nacogdoches, Cleveland, Splendora, Jasper, Pineland, Hemphill, and San Augustine; and a network of approximately 84 automated teller machines, as well as trust services, and/or loan production or other financial services offices. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.

Stock Yards Bancorp Company Profile

Stock Yards Bancorp, Inc. operates as the holding company for Stock Yards Bank & Trust Company that provides commercial and personal banking services in Louisville, Indianapolis, and Cincinnati. Its deposit products include demand deposits, savings deposits, certificates of deposit, money market deposits, and time deposits. The company's loan portfolio comprises commercial and industrial, construction and development, undeveloped land, real estate mortgage, and consumer loans; and originates and sells single-family residential mortgages. In addition, it offers securities brokerage services through an arrangement with a third party broker-dealer; and investment management, trust, employee benefit plan, estate administration, and financial planning services. As of December 31, 2017, the company had 37 banking locations, including 28 full service banking locations in the Louisville metropolitan statistical area (MSA), 4 full service banking locations in the Indianapolis MSA, and 5 full service banking locations in the Cincinnati MSA. Stock Yards Bancorp, Inc. was founded in 1904 and is headquartered in Louisville, Kentucky.

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