Financial Analysis: Lakeland Financial (NASDAQ:LKFN) and MidWestOne Financial Group (NASDAQ:MOFG)

Lakeland Financial (NASDAQ:LKFN) and MidWestOne Financial Group (NASDAQ:MOFG) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lakeland Financial	23.23%	13.77%	1.43%
MidWestOne Financial Group	16.66%	10.35%	0.96%

Institutional & Insider Ownership

81.2% of Lakeland Financial shares are held by institutional investors. Comparatively, 65.4% of MidWestOne Financial Group shares are held by institutional investors. 3.0% of Lakeland Financial shares are held by insiders. Comparatively, 2.5% of MidWestOne Financial Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Lakeland Financial and MidWestOne Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lakeland Financial	$262.76 million	5.60	$93.48 million	$3.79	15.20
MidWestOne Financial Group	$238.84 million	3.29	-$60.29 million	$2.81	13.52

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

Risk and Volatility

Lakeland Financial has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500. Comparatively, MidWestOne Financial Group has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500.

Dividends

Lakeland Financial pays an annual dividend of $2.00 per share and has a dividend yield of 3.5%. MidWestOne Financial Group pays an annual dividend of $0.97 per share and has a dividend yield of 2.6%. Lakeland Financial pays out 52.8% 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. Lakeland Financial has raised its dividend for 14 consecutive years. Lakeland Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations for Lakeland Financial and MidWestOne Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lakeland Financial	0	2	2	0	2.50
MidWestOne Financial Group	1	4	1	0	2.00

Lakeland Financial currently has a consensus price target of $68.67, suggesting a potential upside of 19.23%. MidWestOne Financial Group has a consensus price target of $38.17, suggesting a potential upside of 0.47%. Given Lakeland Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Lakeland Financial is more favorable than MidWestOne Financial Group.

Summary

Lakeland Financial beats MidWestOne Financial Group on 15 of the 17 factors compared between the two stocks.

About Lakeland Financial

Lakeland Financial Corporation operates as the bank holding company for Lake City Bank that provides various banking products and services in the United States. The company accepts various deposit products, such as noninterest bearing, interest-bearing checking, savings, money market, NOW, and demand deposits. Its loan products include commercial and industrial, commercial real estate and multi-family residential, construction, agri-business and agricultural, consumer 1-4 family mortgage, and other commercial and consumer loans. The company also provides retail and merchant credit card services; corporate treasury management, wealth advisory, and trust services; retail brokerage services, including various financial and investment products, such as annuities and life insurance; and mobile business banking and on-line treasury management services. It serves commercial real estate, manufacturing, agriculture, construction, retail, wholesale, finance and insurance, accommodation and food services, and health care industries. The company was founded in 1872 and is headquartered in Warsaw, Indiana.

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.