Eagle Bancorp Montana (NASDAQ:EBMT) vs. 1st Source (NASDAQ:SRCE) Critical Contrast

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

Institutional and Insider Ownership

74.5% of 1st Source shares are owned by institutional investors. Comparatively, 35.7% of Eagle Bancorp Montana shares are owned by institutional investors. 20.2% of 1st Source shares are owned by insiders. Comparatively, 5.8% of Eagle Bancorp Montana shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for 1st Source and Eagle Bancorp Montana, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
1st Source	0	3	1	1	2.60
Eagle Bancorp Montana	0	3	0	1	2.50

1st Source presently has a consensus price target of $77.00, suggesting a potential downside of 5.37%. Eagle Bancorp Montana has a consensus price target of $23.50, suggesting a potential upside of 0.25%. Given Eagle Bancorp Montana’s higher possible upside, analysts clearly believe Eagle Bancorp Montana is more favorable than 1st Source.

Earnings and Valuation

This table compares 1st Source and Eagle Bancorp Montana”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
1st Source	$600.00 million	3.26	$158.28 million	$6.52	12.48
Eagle Bancorp Montana	$127.08 million	1.47	$14.84 million	$1.98	11.84

1st Source has higher revenue and earnings than Eagle Bancorp Montana. Eagle Bancorp Montana 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 Eagle Bancorp Montana’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
1st Source	26.66%	12.39%	1.77%
Eagle Bancorp Montana	12.16%	8.29%	0.74%

Volatility & Risk

1st Source has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Eagle Bancorp Montana has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500.

Dividends

1st Source pays an annual dividend of $1.72 per share and has a dividend yield of 2.1%. Eagle Bancorp Montana pays an annual dividend of $0.58 per share and has a dividend yield of 2.5%. 1st Source pays out 26.4% of its earnings in the form of a dividend. Eagle Bancorp Montana pays out 29.3% 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 increased its dividend for 38 consecutive years and Eagle Bancorp Montana has increased its dividend for 14 consecutive years.

Summary

1st Source beats Eagle Bancorp Montana on 15 of the 17 factors compared between the two stocks.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products 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 mortgage loans, and home equity 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 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 construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

About Eagle Bancorp Montana

Eagle Bancorp Montana, Inc. operates as the bank holding company for Opportunity Bank of Montana that provides various retail banking products and services to small businesses and individuals in Montana. It accepts various deposit products, such as checking, savings, money market, and individual retirement accounts, as well as certificates of deposit accounts. The company also provides 1-4 family residential mortgage loans, such as residential mortgages and construction of residential properties; commercial real estate loans, including multi-family dwellings, nonresidential property, commercial construction and development, and farmland loans; and second mortgage/home equity loans. In addition, it offers consumer loans, such as loans secured by collateral other than real estate, such as automobiles, recreational vehicles, and boats; personal loans and lines of credit; commercial business loans consisting of business loans and lines of credit on a secured and unsecured basis; construction loans; agricultural loans; and mortgage loan services. The company operates full-service branches and automated teller machines. Eagle Bancorp Montana, Inc. was founded in 1922 and is headquartered in Helena, Montana.