Critical Contrast: Southern Michigan Bancorp (OTCMKTS:SOMC) vs. Univest Corporation of Pennsylvania (NASDAQ:UVSP)

Southern Michigan Bancorp (OTCMKTS:SOMC) and Univest Corporation of Pennsylvania (NASDAQ:UVSP) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.

Insider and Institutional Ownership

75.1% of Univest Corporation of Pennsylvania shares are held by institutional investors. 1.8% of Univest Corporation of Pennsylvania shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Southern Michigan Bancorp has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500. Comparatively, Univest Corporation of Pennsylvania has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Southern Michigan Bancorp and Univest Corporation of Pennsylvania, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Michigan Bancorp	0	0	0	0	0.00
Univest Corporation of Pennsylvania	0	3	1	0	2.25

Univest Corporation of Pennsylvania has a consensus target price of $37.00, indicating a potential downside of 4.54%. Given Univest Corporation of Pennsylvania’s stronger consensus rating and higher possible upside, analysts plainly believe Univest Corporation of Pennsylvania is more favorable than Southern Michigan Bancorp.

Earnings & Valuation

This table compares Southern Michigan Bancorp and Univest Corporation of Pennsylvania”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Michigan Bancorp	$93.18 million	1.40	$12.22 million	$2.68	10.45
Univest Corporation of Pennsylvania	$518.35 million	2.08	$90.76 million	$3.33	11.64

Univest Corporation of Pennsylvania has higher revenue and earnings than Southern Michigan Bancorp. Southern Michigan Bancorp is trading at a lower price-to-earnings ratio than Univest Corporation of Pennsylvania, indicating that it is currently the more affordable of the two stocks.

Dividends

Southern Michigan Bancorp pays an annual dividend of $0.68 per share and has a dividend yield of 2.4%. Univest Corporation of Pennsylvania pays an annual dividend of $0.88 per share and has a dividend yield of 2.3%. Southern Michigan Bancorp pays out 25.4% of its earnings in the form of a dividend. Univest Corporation of Pennsylvania pays out 26.4% 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. Univest Corporation of Pennsylvania has increased its dividend for 1 consecutive years. Southern Michigan Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Southern Michigan Bancorp and Univest Corporation of Pennsylvania’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern Michigan Bancorp	13.00%	10.60%	0.76%
Univest Corporation of Pennsylvania	18.25%	10.19%	1.15%

Summary

Univest Corporation of Pennsylvania beats Southern Michigan Bancorp on 14 of the 17 factors compared between the two stocks.

About Southern Michigan Bancorp

Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.

About Univest Corporation of Pennsylvania

Univest Financial Corporation operates as the bank holding company for Univest Bank and Trust Co. that provides banking products and services primarily in the United States. It operates through three segments: Banking, Wealth Management, and Insurance. The Banking segment offers a range of banking services, such as deposit taking, loan origination and servicing, mortgage banking, other general banking, and equipment lease financing services for individuals, businesses, municipalities, and nonprofit organizations. Its Wealth Management segment provides investment advisory, financial planning, and trust and brokerage services for private families and individuals, municipal pension plans, retirement plans, and trusts and guardianships. The Insurance segment offers commercial property and casualty insurance, employee benefits solutions, personal insurance lines, and human resources consulting services. The company was formerly known as Univest Corporation of Pennsylvania and changed its name to Univest Financial Corporation in January 2019. The company was founded in 1876 and is headquartered in Souderton, Pennsylvania.