Enterprise Financial Services (NASDAQ:EFSC) & National Bankshares (NASDAQ:NKSH) Critical Comparison

National Bankshares (NASDAQ:NKSH) and Enterprise Financial Services (NASDAQ:EFSC) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for National Bankshares and Enterprise Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bankshares	0	1	1	0	2.50
Enterprise Financial Services	0	2	4	1	2.86

Enterprise Financial Services has a consensus target price of $70.00, indicating a potential upside of 15.61%. Given Enterprise Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Enterprise Financial Services is more favorable than National Bankshares.

Dividends

National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 3.4%. Enterprise Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.3%. National Bankshares pays out 47.2% of its earnings in the form of a dividend. Enterprise Financial Services pays out 27.8% 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. Enterprise Financial Services has increased its dividend for 11 consecutive years.

Earnings and Valuation

This table compares National Bankshares and Enterprise Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bankshares	$85.32 million	3.29	$15.83 million	$3.18	13.84
Enterprise Financial Services	$1.00 billion	2.19	$201.37 million	$5.03	12.04

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

Institutional & Insider Ownership

29.7% of National Bankshares shares are held by institutional investors. Comparatively, 72.2% of Enterprise Financial Services shares are held by institutional investors. 3.3% of National Bankshares shares are held by company insiders. Comparatively, 2.2% of Enterprise Financial Services shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares National Bankshares and Enterprise Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bankshares	23.22%	10.66%	1.09%
Enterprise Financial Services	18.72%	9.70%	1.11%

Volatility and Risk

National Bankshares has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Enterprise Financial Services has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Summary

Enterprise Financial Services beats National Bankshares on 12 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 Enterprise Financial Services

Enterprise Financial Services Corp operates as the holding company for Enterprise Bank & Trust that offers banking and wealth management services to individuals and corporate customers primarily in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico. It provides checking, savings, money market accounts, and certificates of deposit. The company also provides commercial and industrial, commercial real estate, real estate construction and development, residential real estate, small business administration, agricultural, consumer, and other loan products. In addition, it offers treasury management and international trade services; tax credit brokerage services; life insurance premium and sponsor finance; tax credit related lending; other deposit accounts, such as community associations, property management, third party escrow, and trust services; treasury management product and services; customized solutions and products; cash management; fiduciary, investment management, and financial advisory services; and customer hedging products, including international banking, card services, and tax credit businesses. Further, the company provides online, device applications, text, and voice banking; remote deposit capture; internet banking, mobile banking, cash management, positive pay services, fraud detection and prevention, automated payables, check image, and statement and document imaging; and controlled disbursements, repurchase agreements, and sweep investment accounts. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.