Stock Yards Bancorp (NASDAQ:SYBT) and ConnectOne Bancorp (NASDAQ:CNOB) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Stock Yards Bancorp 31.99% 16.01% 1.75%
ConnectOne Bancorp 28.59% 11.73% 1.31%

Dividends

Stock Yards Bancorp pays an annual dividend of $1.04 per share and has a dividend yield of 3.0%. ConnectOne Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 1.7%. Stock Yards Bancorp pays out 43.0% of its earnings in the form of a dividend. ConnectOne Bancorp pays out 16.1% 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. Stock Yards Bancorp has increased its dividend for 7 consecutive years. Stock Yards Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings for Stock Yards Bancorp and ConnectOne Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stock Yards Bancorp 0 1 0 0 2.00
ConnectOne Bancorp 0 0 0 0 N/A

Stock Yards Bancorp currently has a consensus price target of $36.00, suggesting a potential upside of 3.27%. Given Stock Yards Bancorp’s higher possible upside, equities research analysts plainly believe Stock Yards Bancorp is more favorable than ConnectOne Bancorp.

Valuation & Earnings

This table compares Stock Yards Bancorp and ConnectOne Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stock Yards Bancorp $175.12 million 4.54 $55.52 million $2.42 14.40
ConnectOne Bancorp $221.87 million 3.48 $60.35 million $2.23 9.77

ConnectOne Bancorp has higher revenue and earnings than Stock Yards Bancorp. ConnectOne 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.

Institutional and Insider Ownership

50.2% of Stock Yards Bancorp shares are held by institutional investors. Comparatively, 60.8% of ConnectOne Bancorp shares are held by institutional investors. 8.3% of Stock Yards Bancorp shares are held by company insiders. Comparatively, 7.6% of ConnectOne Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Stock Yards Bancorp has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500. Comparatively, ConnectOne Bancorp has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Summary

Stock Yards Bancorp beats ConnectOne Bancorp on 10 of the 15 factors compared between the two stocks.

Stock Yards Bancorp Company Profile

Stock Yards Bancorp, Inc. operates as the holding company for Stock Yards Bank & Trust Company that provides commercial and personal banking services in Louisville, Indianapolis, and Cincinnati. Its deposit products include demand deposits, savings deposits, money market deposits, and time deposits. The company's loan portfolio comprises commercial and industrial, construction and development, undeveloped land, real estate mortgage, and consumer loans; and originates and sells single-family residential mortgages. In addition, it offers securities brokerage services through an arrangement with a third party broker-dealer; and investment management, trust, employee benefit plan, estate administration, and financial planning services. As of December 31, 2018, the company had 38 full service banking locations, including 28 in the Louisville metropolitan statistical area (MSA), 5 in Indianapolis MSA, and 5 in Cincinnati MSA. Stock Yards Bancorp, Inc. was founded in 1904 and is headquartered in Louisville, Kentucky.

ConnectOne Bancorp Company Profile

ConnectOne Bancorp, Inc. operates as the bank holding company for ConnectOne Bank, a state chartered bank that provides various commercial banking products and services. The company offers a range of deposit products, including personal and business checking accounts, retirement accounts, money market accounts, and time and savings accounts. It also provides personal and commercial business loans on a secured and unsecured basis; revolving lines of credit; commercial mortgage loans; residential mortgages on primary and secondary residences; home equity loans; bridge loans; and other personal purpose loans. In addition, the company offers credit cards, wire transfers, access to automated teller services, Internet banking, treasury direct, ACH origination, lockbox, mobile banking by phone, safe deposit box, and remote deposit capture services. As of January 24, 2019, the company offered its commercial and consumer banking and lending services and products through its 29 banking offices located in New York and New Jersey. It serves small-to-medium sized businesses, high net worth individuals, professional practices, and consumer and retail clients. The company was formerly known as Center Bancorp, Inc. and changed its name to ConnectOne Bancorp, Inc. in July 2014. ConnectOne Bancorp, Inc. was incorporated in 1982 and is headquartered in Englewood Cliffs, New Jersey.

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