Critical Analysis: Pinnacle Financial Partners (NASDAQ:PNFP) & Madison County Financial (OTCMKTS:MCBK)

Madison County Financial (OTCMKTS:MCBK) and Pinnacle Financial Partners (NASDAQ:PNFP) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Risk & Volatility

Madison County Financial has a beta of 0.12, meaning that its stock price is 88% less volatile than the S&P 500. Comparatively, Pinnacle Financial Partners has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Valuation & Earnings

This table compares Madison County Financial and Pinnacle Financial Partners”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Madison County Financial	$29.54 million	2.37	$3.82 million	$1.03	25.48
Pinnacle Financial Partners	$3.07 billion	2.41	$475.06 million	$7.87	12.12

Pinnacle Financial Partners has higher revenue and earnings than Madison County Financial. Pinnacle Financial Partners is trading at a lower price-to-earnings ratio than Madison County Financial, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

87.4% of Pinnacle Financial Partners shares are owned by institutional investors. 16.9% of Madison County Financial shares are owned by insiders. Comparatively, 1.5% of Pinnacle Financial Partners shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Madison County Financial and Pinnacle Financial Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Madison County Financial	N/A	N/A	N/A
Pinnacle Financial Partners	19.17%	9.91%	1.17%

Analyst Ratings

This is a breakdown of current ratings and target prices for Madison County Financial and Pinnacle Financial Partners, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Madison County Financial	0	0	0	0	0.00
Pinnacle Financial Partners	0	7	7	1	2.60

Pinnacle Financial Partners has a consensus price target of $111.38, suggesting a potential upside of 16.74%. Given Pinnacle Financial Partners’ stronger consensus rating and higher probable upside, analysts plainly believe Pinnacle Financial Partners is more favorable than Madison County Financial.

Dividends

Madison County Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.4%. Pinnacle Financial Partners pays an annual dividend of $0.96 per share and has a dividend yield of 1.0%. Madison County Financial pays out 35.0% of its earnings in the form of a dividend. Pinnacle Financial Partners pays out 12.2% 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. Pinnacle Financial Partners has raised its dividend for 1 consecutive years.

Summary

Pinnacle Financial Partners beats Madison County Financial on 15 of the 18 factors compared between the two stocks.

About Madison County Financial

Madison County Financial, Inc. operates as the holding company for Madison County Bank that provides banking and financial services to individual and corporate customers in Nebraska, the United States. It offers checking, money market savings, savings, and individual retirement accounts; certificates of deposit; credit and debit cards; home loans; and consumer loans, including home equity lines of credit, second mortgage, home improvement, recreational vehicle, personal, and overdraft protection loans, as well as loans for automobiles, trucks, and vans. The company also provides agricultural real estate, machinery and equipment, livestock and crop, and operating loans; and commercial real estate, construction, investment property, and working capital loans, as well as equipment financing services. In addition, it offers online and mobile banking, and merchant services. The company was formerly known as Madison County Holding Company and changed its name to Madison County Financial, Inc. in October 2012. Madison County Financial, Inc. was founded in 1888 and is headquartered in Madison, Nebraska.

About Pinnacle Financial Partners

Pinnacle Financial Partners, Inc., together with its subsidiaries, operates as the bank holding company for Pinnacle Bank that provides various banking products and services to individuals, businesses, and professional entities in the United States. The company accepts various deposits, including savings, noninterest-bearing and interest-bearing checking, money market, and certificate of deposit accounts; and provides treasury management services, which includes online wire origination, enhanced ACH origination services, positive pay, zero balance and sweep accounts, automated bill pay services, electronic receivables processing, lockbox processing, and merchant card acceptance services. It offers equipment and working capital loans; commercial real estate loans comprising investment properties and business loans; secured and unsecured loans, such as installment and term, lines of credit, and residential first mortgage, as well as home equity loans and home equity lines of credit; and credit cards for consumers and businesses. The company also provides investment products; brokerage and investment advisory programs; and fiduciary and investment services, such as personal trust, investment management, estate administration, endowments, foundations, individual retirement accounts, escrow services, and custody. In addition, it offers insurance agency services primarily in the property and casualty area; merger and acquisition advisory services; and private debt, equity and mezzanine, and other middle-market advisory services. Further, the company provides telephone and online banking, mobile banking, debit and credit cards, direct deposit and remote deposit capture, mobile deposit option, automated teller machine, and cash management services. Pinnacle Financial Partners, Inc. was incorporated in 2000 and is headquartered in Nashville, Tennessee.