Analyzing Enterprise Financial Services (NASDAQ:EFSC) & Erste Group Bank (OTCMKTS:EBKDY)

Erste Group Bank (OTCMKTS:EBKDY) and Enterprise Financial Services (NASDAQ:EFSC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.

Risk and Volatility

Erste Group Bank has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Enterprise Financial Services has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Institutional & Insider Ownership

0.4% of Erste Group Bank shares are held by institutional investors. Comparatively, 72.2% of Enterprise Financial Services shares are held by institutional investors. 2.2% of Enterprise Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Erste Group Bank and Enterprise Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Erste Group Bank	18.39%	10.22%	0.94%
Enterprise Financial Services	18.72%	9.70%	1.11%

Dividends

Erste Group Bank pays an annual dividend of $0.27 per share and has a dividend yield of 0.4%. Enterprise Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.3%. Erste Group Bank pays out 5.2% of its earnings in the form of a dividend. Enterprise Financial Services pays out 27.8% 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. Enterprise Financial Services has increased its dividend for 11 consecutive years. Enterprise Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and target prices for Erste Group Bank and Enterprise Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Erste Group Bank	0	1	5	1	3.00
Enterprise Financial Services	0	2	4	0	2.67

Enterprise Financial Services has a consensus price target of $70.00, indicating a potential upside of 13.64%. Given Enterprise Financial Services’ higher probable upside, analysts plainly believe Enterprise Financial Services is more favorable than Erste Group Bank.

Valuation and Earnings

This table compares Erste Group Bank and Enterprise Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Erste Group Bank	$23.77 billion	2.23	$3.97 billion	$5.22	13.07
Enterprise Financial Services	$1.00 billion	2.23	$201.37 million	$5.03	12.25

Erste Group Bank has higher revenue and earnings than Enterprise Financial Services. Enterprise Financial Services is trading at a lower price-to-earnings ratio than Erste Group Bank, indicating that it is currently the more affordable of the two stocks.

Summary

Erste Group Bank beats Enterprise Financial Services on 11 of the 18 factors compared between the two stocks.

About Erste Group Bank

Erste Group Bank AG provides a range of banking and other financial services to retail, corporate, and public sector customers. The company operates through Retail, Corporates, Group Markets, Asset/Liability Management & Local Corporate Center, Savings Banks, and Group Corporate Center segments. It provides mortgage and consumer loans, investment products, current accounts, savings products, and credit cards, as well as cross selling products, such as leasing, insurance, and building society products. The company also offers factoring and accounts receivable purchasing; investment, acquisition and leveraged, project, and commercial real estate finance; interest rate and currency hedging, letters of credit, documentary collections, and guarantees; account management, payments, digital-banking, cash logistics, and payment factory and cash pooling services; documentary collection, equity interests and investments, revolving export credits lines, letters of credit, customer financing, and export guarantee; and loan syndication, and debt and equity capital market services. In addition, it provides cash management, trade finance, customer referral, markets execution, debt capital markets, and custody and brokerage services. Further, the company offers corporate finance; portfolio management; trading and market; trade execution, market making, and short-term liquidity management; and asset/liability management services, as well as working capital and bridge loans. It operates in Austria, the Czech Republic, Slovakia, Romania, Hungary, Serbia, Croatia, and internationally. The company was founded in 1819 and is headquartered in Vienna, Austria.

About Enterprise Financial Services

Enterprise Financial Services Corp operates as the holding company for Enterprise Bank & Trust that offers banking and wealth management services to individuals and corporate customers primarily in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico. It provides checking, savings, money market accounts, and certificates of deposit. The company also provides commercial and industrial, commercial real estate, real estate construction and development, residential real estate, small business administration, agricultural, consumer, and other loan products. In addition, it offers treasury management and international trade services; tax credit brokerage services; life insurance premium and sponsor finance; tax credit related lending; other deposit accounts, such as community associations, property management, third party escrow, and trust services; treasury management product and services; customized solutions and products; cash management; fiduciary, investment management, and financial advisory services; and customer hedging products, including international banking, card services, and tax credit businesses. Further, the company provides online, device applications, text, and voice banking; remote deposit capture; internet banking, mobile banking, cash management, positive pay services, fraud detection and prevention, automated payables, check image, and statement and document imaging; and controlled disbursements, repurchase agreements, and sweep investment accounts. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.