Critical Analysis: Stock Yards Bancorp (NASDAQ:SYBT) and Valley National Bancorp (NASDAQ:VLY)

Stock Yards Bancorp (NASDAQ:SYBT) and Valley National Bancorp (NASDAQ:VLY) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Stock Yards Bancorp and Valley National Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stock Yards Bancorp	0	6	1	0	2.14
Valley National Bancorp	0	3	11	1	2.87

Stock Yards Bancorp presently has a consensus target price of $88.00, indicating a potential upside of 12.36%. Valley National Bancorp has a consensus target price of $16.31, indicating a potential upside of 15.99%. Given Valley National Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Valley National Bancorp is more favorable than Stock Yards Bancorp.

Earnings and Valuation

This table compares Stock Yards Bancorp and Valley National Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stock Yards Bancorp	$564.54 million	4.31	$140.15 million	$5.02	15.60
Valley National Bancorp	$3.49 billion	2.22	$597.98 million	$1.18	11.92

Valley National Bancorp has higher revenue and earnings than Stock Yards Bancorp. Valley National Bancorp 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.

Risk & Volatility

Stock Yards Bancorp has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, Valley National Bancorp has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Institutional and Insider Ownership

56.5% of Stock Yards Bancorp shares are owned by institutional investors. Comparatively, 61.0% of Valley National Bancorp shares are owned by institutional investors. 2.9% of Stock Yards Bancorp shares are owned by insiders. Comparatively, 1.1% of Valley National Bancorp shares are owned 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.

Dividends

Stock Yards Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 1.7%. Valley National Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 3.1%. Stock Yards Bancorp pays out 26.3% of its earnings in the form of a dividend. Valley National Bancorp pays out 37.3% 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. Stock Yards Bancorp has raised its dividend for 15 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Stock Yards Bancorp	25.41%	13.39%	1.55%
Valley National Bancorp	20.44%	9.63%	1.10%

About Stock Yards Bancorp

Stock Yards Bancorp, Inc. operates as a holding company for Stock Yards Bank & Trust Company that provides various financial services for individuals, corporations, and others in the United States. It operates in two segments, Commercial Banking, and WM&T. The Commercial Banking segment offers a range of loan and deposit products to individual consumers and businesses in all its markets through retail lending, mortgage banking, deposit services, online banking, mobile banking, private banking, commercial lending, commercial real estate lending, leasing, treasury management services, merchant services, international banking, correspondent banking, and other banking services. This segment also provides securities brokerage services through an arrangement with a third party broker-dealer. The WM&T segment provides investment management, financial and retirement planning, and trust and estate services, as well as retirement plan management for businesses and corporations. It provides services in Louisville, central, eastern, and northern Kentucky, as well as Indianapolis, Indiana and Cincinnati, Ohio metropolitan markets. The company was founded in 1904 and is headquartered in Louisville, Kentucky.

About Valley National Bancorp

Valley National Bancorp operates as the holding company for Valley National Bank that provides various commercial, private banking, retail, insurance, and wealth management financial services products. It operates through Consumer Banking, Commercial Banking, and Treasury and Corporate other segments. The company offers non-interest bearing, savings, NOW, money market, and time deposit accounts; commercial and industrial, commercial real estate, residential mortgage, and automobile loans; loans secured by the cash surrender value of life insurance; home equity loans and lines of credit; automobile financing; and secured and unsecured other consumer loans. It also invests in various securities and interest-bearing deposits with other banks; and provides international banking services, such as standby and documentary letters of credit, and related products, as well as foreign exchange transactions, documentary collections, and foreign wire transfers services. In addition, the company offers investment services for individuals and small to medium sized businesses; and trusts investment strategies designed for various investment profiles and objectives. Further, it provides trust services, such as living and testamentary trusts, investment management, custodial and escrow services, and estate administration to individuals; tax credit advisory services; brokerage services; property and casualty, life, health, and title insurance agency services; and health care equipment lending and other commercial equipment leasing services, as well as owns real estate related investments. Additionally, the company offers online, mobile, and telephone banking services; receivable, payment, and security solution, merchant, payroll processing, and liquidity services; credit cards; and drive-in and night deposit, automated teller machine, remote deposit capture, and safe deposit facility services. Valley National Bancorp was founded in 1927 and is headquartered in Morristown, New Jersey.