Financial Comparison: National Bankshares (NASDAQ:NKSH) vs. South Plains Financial (NASDAQ:SPFI)

National Bankshares (NASDAQ:NKSH) and South Plains Financial (NASDAQ:SPFI) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, analyst recommendations, earnings, valuation, dividends and institutional ownership.

Profitability

This table compares National Bankshares and South Plains Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bankshares	20.39%	10.38%	1.03%
South Plains Financial	20.22%	12.58%	1.35%

Volatility and Risk

National Bankshares has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, South Plains Financial has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.

Insider and Institutional Ownership

29.7% of National Bankshares shares are held by institutional investors. Comparatively, 55.0% of South Plains Financial shares are held by institutional investors. 3.3% of National Bankshares shares are held by insiders. Comparatively, 24.3% of South Plains Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for National Bankshares and South Plains Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bankshares	0	1	0	1	3.00
South Plains Financial	0	1	5	0	2.83

South Plains Financial has a consensus target price of $46.25, suggesting a potential upside of 13.94%. Given South Plains Financial’s higher possible upside, analysts plainly believe South Plains Financial is more favorable than National Bankshares.

Dividends

National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 4.3%. South Plains Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.7%. National Bankshares pays out 54.5% of its earnings in the form of a dividend. South Plains Financial pays out 19.0% 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. South Plains Financial has increased its dividend for 5 consecutive years.

Earnings and Valuation

This table compares National Bankshares and South Plains Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bankshares	$85.32 million	2.63	$15.83 million	$2.75	12.80
South Plains Financial	$296.89 million	2.62	$58.47 million	$3.57	11.37

South Plains Financial has higher revenue and earnings than National Bankshares. South Plains Financial is trading at a lower price-to-earnings ratio than National Bankshares, indicating that it is currently the more affordable of the two stocks.

Summary

South Plains Financial beats National Bankshares on 11 of the 18 factors compared between the two stocks.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, Texas.