Enterprise Financial Services Corporation (NASDAQ: EFSC) and DNB Financial Corp (NASDAQ:DNBF) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Institutional & Insider Ownership

72.9% of Enterprise Financial Services Corporation shares are held by institutional investors. Comparatively, 30.1% of DNB Financial Corp shares are held by institutional investors. 5.6% of Enterprise Financial Services Corporation shares are held by company insiders. Comparatively, 18.4% of DNB Financial Corp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Enterprise Financial Services Corporation and DNB Financial Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enterprise Financial Services Corporation 0 2 1 0 2.33
DNB Financial Corp 0 1 0 0 2.00

Enterprise Financial Services Corporation currently has a consensus target price of $42.33, indicating a potential downside of 0.04%. DNB Financial Corp has a consensus target price of $37.00, indicating a potential upside of 5.11%. Given DNB Financial Corp’s higher possible upside, analysts clearly believe DNB Financial Corp is more favorable than Enterprise Financial Services Corporation.

Dividends

Enterprise Financial Services Corporation pays an annual dividend of $0.44 per share and has a dividend yield of 1.0%. DNB Financial Corp pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. Enterprise Financial Services Corporation pays out 19.0% of its earnings in the form of a dividend. DNB Financial Corp pays out 17.0% 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.

Volatility & Risk

Enterprise Financial Services Corporation has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, DNB Financial Corp has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Earnings & Valuation

This table compares Enterprise Financial Services Corporation and DNB Financial Corp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Enterprise Financial Services Corporation $176.17 million 5.64 $54.43 million $2.32 18.25
DNB Financial Corp $37.60 million 3.99 $7.03 million $1.65 21.33

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

Profitability

This table compares Enterprise Financial Services Corporation and DNB Financial Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enterprise Financial Services Corporation 24.54% 11.18% 1.14%
DNB Financial Corp 16.38% 7.97% 0.70%

Summary

Enterprise Financial Services Corporation beats DNB Financial Corp on 12 of the 16 factors compared between the two stocks.

About Enterprise Financial Services Corporation

Enterprise Financial Services Corp is a financial holding company for a full service banking subsidiary, Enterprise Bank & Trust (the Bank). The Bank offers banking and wealth management services to individuals and business customers primarily located in the St. Louis, Kansas City and Phoenix metropolitan markets. The Company offers a range of business and personal banking services, and wealth management services. Its tax credit brokerage activities consist of the acquisition of Federal and State tax credits and the sale of these tax credits to clients. Enterprise Trust, a division of the Bank (Enterprise Trust or Trust), provides financial planning, estate planning, investment management, and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. It also offers a range of Treasury Management products and services that benefit businesses ranging from large national clients to smallest local merchants.

About DNB Financial Corp

DNB Financial Corporation is a bank holding company for DNB First, National Association (the Bank). The Company operates through the Community Banking segment. The Bank is a commercial bank providing a range of services to individuals and small to medium sized businesses in the southeastern Pennsylvania market area, including accepting time, demand and savings deposits, and making secured and unsecured commercial, real estate and consumer loans. In addition, the Bank has over 10 branches and a wealth management group, DNB First Wealth Management. Its loan and lease portfolio consists primarily of commercial and residential real estate loans, commercial loans and lines of credit (including commercial construction), commercial leases and consumer loans. Its investment portfolio includes the United States agency securities, bank stocks, and other bonds and notes. Its primary source of funds is derived from customer deposits, which are typically generated by its branch offices.

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