First Mid-Illinois Bancshares (NASDAQ: FMBH) and German American Bancorp (NASDAQ:GABC) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Volatility & Risk

First Mid-Illinois Bancshares has a beta of -0.03, meaning that its stock price is 103% less volatile than the S&P 500. Comparatively, German American Bancorp has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Earnings & Valuation

This table compares First Mid-Illinois Bancshares and German American Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
First Mid-Illinois Bancshares $102.41 million 4.44 $21.84 million $2.32 15.51
German American Bancorp $135.38 million 5.88 $35.18 million $1.57 22.10

German American Bancorp has higher revenue and earnings than First Mid-Illinois Bancshares. First Mid-Illinois Bancshares 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.

Analyst Recommendations

This is a summary of recent recommendations and price targets for First Mid-Illinois Bancshares and German American Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Mid-Illinois Bancshares 0 2 0 0 2.00
German American Bancorp 0 3 0 0 2.00

First Mid-Illinois Bancshares presently has a consensus target price of $37.00, suggesting a potential upside of 2.81%. German American Bancorp has a consensus target price of $38.67, suggesting a potential upside of 11.43%. Given German American Bancorp’s higher possible upside, analysts clearly believe German American Bancorp is more favorable than First Mid-Illinois Bancshares.

Dividends

First Mid-Illinois Bancshares pays an annual dividend of $0.64 per share and has a dividend yield of 1.8%. German American Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 1.5%. First Mid-Illinois Bancshares pays out 27.6% of its earnings in the form of a dividend. German American Bancorp pays out 33.1% 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. First Mid-Illinois Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

19.6% of First Mid-Illinois Bancshares shares are held by institutional investors. Comparatively, 36.1% of German American Bancorp shares are held by institutional investors. 20.3% of First Mid-Illinois Bancshares shares are held by company insiders. Comparatively, 8.5% of German American Bancorp 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 First Mid-Illinois Bancshares and German American Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Mid-Illinois Bancshares 22.67% 9.75% 1.02%
German American Bancorp 27.52% 11.28% 1.31%

Summary

German American Bancorp beats First Mid-Illinois Bancshares on 10 of the 14 factors compared between the two stocks.

About First Mid-Illinois Bancshares

First Mid-Illinois Bancshares, Inc. is a financial holding company. The Company is engaged in the business of banking through its subsidiaries, First Mid-Illinois Bank & Trust, N.A. (First Mid Bank) and First Clover Leaf Bank, N.A. (First Clover Leaf Bank). The Company provides data processing services to affiliates through another subsidiary, Mid-Illinois Data Services, Inc. (MIDS). The Company offers insurance products and services to customers through its subsidiary, The Checkley Agency, Inc., doing business as First Mid Insurance Group (First Mid Insurance). The Company also owns three statutory business trusts, First Mid-Illinois Statutory Trust I (First Mid Trust I), and First Mid-Illinois Statutory Trust II (First Mid Trust II), and Clover Leaf Statutory Trust I (CLST Trust). As of December 31, 2016, the Company operated in three primary lines of business: community banking, wealth management, and insurance brokerage.

About German American Bancorp

German American Bancorp, Inc. is a bank holding company. As of December 31, 2016, the Company, through its banking subsidiary German American Bancorp, operated 51 banking offices in 19 contiguous southern Indiana counties and one northern Kentucky county. Its segments are core banking, trust and investment advisory services, insurance, and other. The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in its local markets. The core banking segment also involves the sale of residential mortgage loans in the secondary market. The trust and investment advisory services segment involves providing trust, investment advisory, and brokerage services to customers. The insurance segment offers a range of personal and corporate property and casualty insurance products, in its banking subsidiary’s local markets.

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