1st Source (NASDAQ:SRCE) and United Bankshares (NASDAQ:UBSI) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Dividends

1st Source pays an annual dividend of $1.16 per share and has a dividend yield of 2.3%. United Bankshares pays an annual dividend of $1.40 per share and has a dividend yield of 3.7%. 1st Source pays out 36.7% of its earnings in the form of a dividend. United Bankshares pays out 57.1% 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. 1st Source has raised its dividend for 33 consecutive years and United Bankshares has raised its dividend for 1 consecutive years.

Earnings and Valuation

This table compares 1st Source and United Bankshares’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
1st Source $354.37 million 3.68 $82.41 million $3.16 16.18
United Bankshares $846.43 million 4.53 $256.34 million $2.45 15.42

United Bankshares has higher revenue and earnings than 1st Source. United Bankshares is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares 1st Source and United Bankshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
1st Source 23.97% 11.50% 1.41%
United Bankshares 28.68% 7.89% 1.33%

Volatility and Risk

1st Source has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, United Bankshares has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Institutional & Insider Ownership

70.3% of 1st Source shares are held by institutional investors. Comparatively, 69.1% of United Bankshares shares are held by institutional investors. 20.0% of 1st Source shares are held by company insiders. Comparatively, 1.6% of United Bankshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for 1st Source and United Bankshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
1st Source 0 1 0 0 2.00
United Bankshares 0 3 0 0 2.00

United Bankshares has a consensus price target of $41.58, indicating a potential upside of 10.02%. Given United Bankshares’ higher possible upside, analysts plainly believe United Bankshares is more favorable than 1st Source.

Summary

United Bankshares beats 1st Source on 8 of the 15 factors compared between the two stocks.

About 1st Source

1st Source Corporation operates as the holding company for 1st Source Bank that provides commercial and consumer banking services, trust and investment management services, and insurance to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate loans, and lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides a range of trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for new and used aircraft, automobiles and light trucks, construction equipment, and medium and heavy duty trucks; and leases construction equipment, various types of trucks, vans, automobiles, motor coaches, shuttle buses, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services; and investment advisory services to trust and investment clients. As of December 31, 2018, the company operated through 80 banking centers in 17 counties in Indiana and Michigan, and Sarasota County in Florida. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

About United Bankshares

United Bankshares, Inc., a financial holding company, 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. It also offers personal, commercial, floor plan, and student loans; construction and real estate loans; and consumer loans, including credit card and home equity loans. In addition, the company provides safe deposit boxes, wire transfers, and other banking products and services; investment and security, and trust services; services to correspondent banks, including check clearing, safekeeping, and 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. The company operates 139 full service offices, which consists of 51 offices in West Virginia; 83 offices in the Shenandoah Valley region of Virginia and the Northern Virginia, Maryland, and Washington, D.C. metropolitan areas; 4 offices in southwestern Pennsylvania; and 1 office in southeastern Ohio. United Bankshares, Inc. was incorporated in 1982 and is headquartered in Charleston, West Virginia.

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