Critical Analysis: Wintrust Financial (NASDAQ:WTFC) versus MidWestOne Financial Group (NASDAQ:MOFG)

Wintrust Financial (NASDAQ:WTFC) and MidWestOne Financial Group (NASDAQ:MOFG) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Institutional & Insider Ownership

93.5% of Wintrust Financial shares are owned by institutional investors. Comparatively, 65.4% of MidWestOne Financial Group shares are owned by institutional investors. 1.0% of Wintrust Financial shares are owned by company insiders. Comparatively, 2.5% of MidWestOne Financial Group shares are owned by company 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.

Risk and Volatility

Wintrust Financial has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, MidWestOne Financial Group has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Valuation & Earnings

This table compares Wintrust Financial and MidWestOne Financial Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wintrust Financial	$2.65 billion	3.32	$695.04 million	$10.88	12.10
MidWestOne Financial Group	$238.84 million	3.43	-$60.29 million	$2.81	14.07

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

Profitability

This table compares Wintrust Financial and MidWestOne Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Wintrust Financial	18.85%	13.05%	1.21%
MidWestOne Financial Group	16.66%	10.35%	0.96%

Dividends

Wintrust Financial pays an annual dividend of $2.00 per share and has a dividend yield of 1.5%. MidWestOne Financial Group pays an annual dividend of $0.97 per share and has a dividend yield of 2.5%. Wintrust Financial pays out 18.4% of its earnings in the form of a dividend. MidWestOne Financial Group pays out 34.5% 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. Wintrust Financial has increased its dividend for 12 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings for Wintrust Financial and MidWestOne Financial Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wintrust Financial	0	2	11	1	2.93
MidWestOne Financial Group	0	5	1	0	2.17

Wintrust Financial presently has a consensus price target of $152.92, indicating a potential upside of 16.19%. MidWestOne Financial Group has a consensus price target of $38.17, indicating a potential downside of 3.47%. Given Wintrust Financial’s stronger consensus rating and higher probable upside, research analysts plainly believe Wintrust Financial is more favorable than MidWestOne Financial Group.

Summary

Wintrust Financial beats MidWestOne Financial Group on 13 of the 18 factors compared between the two stocks.

About Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance, and Wealth Management. The Community Banking segment offers non-interest bearing deposits, non-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.

About MidWestOne Financial Group

MidWestOne Financial Group, Inc. operates as the bank holding company for MidWestOne Bank that provides commercial and retail banking products and services to individuals, businesses, governmental units, and institutional customers. It offers range of deposit products, including noninterest bearing and interest bearing demand deposits, savings, money market, and time deposits accounts. The company also provides commercial, real estate, agricultural, credit card, and consumer loans; and financing arrangements, such as brokered deposits, term debt, subordinated debt, and equity. In addition, it offers trust and investment services comprising administering estates, trusts, and conservatorships; property and farm management, investment advisory, retail securities brokerage, financial planning, and custodial services; and licensed brokers services. Further, the company provides online and mobile banking, debit cards, automated teller machines, and safe deposit boxes. MidWestOne Financial Group, Inc. was founded in 1934 and is headquartered in Iowa City, Iowa.