Reviewing German American Bancorp (NASDAQ:GABC) and First Business Financial Services (NASDAQ:FBIZ)

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

Institutional & Insider Ownership

60.1% of First Business Financial Services shares are held by institutional investors. Comparatively, 46.9% of German American Bancorp shares are held by institutional investors. 5.0% of First Business Financial Services shares are held by company insiders. Comparatively, 3.2% of German American Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares First Business Financial Services and German American Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$279.25 million	1.69	$50.32 million	$6.07	9.31
German American Bancorp	$487.40 million	3.34	$112.64 million	$3.61	12.03

German American Bancorp has higher revenue and earnings than First Business Financial Services. First Business Financial Services 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.

Profitability

This table compares First Business Financial Services and German American Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	18.16%	14.60%	1.25%
German American Bancorp	27.09%	12.13%	1.62%

Dividends

First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.4%. German American Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.9%. First Business Financial Services pays out 22.4% of its earnings in the form of a dividend. German American Bancorp pays out 34.3% 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 Business Financial Services has raised its dividend for 13 consecutive years and German American Bancorp has raised its dividend for 13 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for First Business Financial Services and German American Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Business Financial Services	0	0	4	0	3.00
German American Bancorp	0	1	3	0	2.75

First Business Financial Services presently has a consensus target price of $65.50, indicating a potential upside of 15.85%. German American Bancorp has a consensus target price of $47.67, indicating a potential upside of 9.78%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, equities research analysts clearly believe First Business Financial Services is more favorable than German American Bancorp.

Volatility and Risk

First Business Financial Services has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, German American Bancorp has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500.

Summary

First Business Financial Services beats German American Bancorp on 9 of the 16 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.

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.