Critical Analysis: German American Bancorp (NASDAQ:GABC) and United Bankshares (NASDAQ:UBSI)

German American Bancorp (NASDAQ:GABC) and United Bankshares (NASDAQ:UBSI) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, risk, dividends and valuation.

Profitability

This table compares German American Bancorp and United Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
German American Bancorp	28.25%	12.14%	1.69%
United Bankshares	27.97%	9.39%	1.53%

Earnings & Valuation

This table compares German American Bancorp and United Bankshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
German American Bancorp	$487.40 million	3.71	$112.64 million	$3.79	12.71
United Bankshares	$1.82 billion	3.40	$464.60 million	$3.67	12.39

United Bankshares has higher revenue and earnings than German American Bancorp. United Bankshares is trading at a lower price-to-earnings ratio than German American Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

German American Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.6%. United Bankshares pays an annual dividend of $1.52 per share and has a dividend yield of 3.3%. German American Bancorp pays out 32.7% of its earnings in the form of a dividend. United Bankshares pays out 41.4% 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. German American Bancorp has raised its dividend for 13 consecutive years and United Bankshares has raised its dividend for 26 consecutive years. United Bankshares 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 for German American Bancorp and United Bankshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
German American Bancorp	0	2	2	1	2.80
United Bankshares	0	4	3	0	2.43

German American Bancorp currently has a consensus price target of $53.33, indicating a potential upside of 10.74%. United Bankshares has a consensus price target of $47.80, indicating a potential upside of 5.15%. Given German American Bancorp’s stronger consensus rating and higher possible upside, equities analysts plainly believe German American Bancorp is more favorable than United Bankshares.

Volatility and Risk

German American Bancorp has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, United Bankshares has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Insider & Institutional Ownership

46.9% of German American Bancorp shares are held by institutional investors. Comparatively, 70.8% of United Bankshares shares are held by institutional investors. 3.2% of German American Bancorp shares are held by insiders. Comparatively, 3.2% of United Bankshares shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

German American Bancorp beats United Bankshares on 11 of the 18 factors compared between the two stocks.

About German American Bancorp

German American Bancorp, Inc. operates as a financial holding company for German American Bank that provides retail and commercial banking services. The company operates through three segments: Core Banking, Wealth Management Services, and Insurance Operations. The Core Banking segment accepts deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Wealth Management segment provides trust, investment advisory, brokerage, and retirement planning services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. It also offers checking, saving, and individual retirement accounts; certificates of deposit; wire transfer; credit cards; home equity, mortgages, and small business; treasury management; and online and mobile banking, bill pay, digital wallet, mobile check deposit, credit score and report, money management, and estatements, as well as wealth advisory. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.

About United Bankshares

United Bankshares, Inc., through its subsidiaries, primarily provides commercial and retail banking products and services in the United States. It operates through two segments, Community Banking and Mortgage Banking. The company accepts checking, savings, and time and money market accounts; individual retirement accounts; and demand deposits, statement and special savings, and NOW accounts. Its loan products include commercial loans and leases to small to mid-size industrial and commercial companies; construction and real estate loans, such as commercial and residential mortgages, and loans secured by owner-occupied real estate; personal, student, credit card receivables, personal, commercial, and floor plan loans; and home equity loans. In addition, the company provides credit cards; safe deposit boxes, wire transfers, and other banking products and services; investment and security services; services to correspondent banks, including buying and selling federal funds; automated teller machine services; and internet and telephone banking services. Further, it offers community banking services, such as asset management, real property title insurance, financial planning, mortgage banking, and brokerage services, as well as investment management and retirement planning services. United Bankshares, Inc. was incorporated in 1982 and is headquartered in Charleston, West Virginia.