Financial Analysis: QCR (NASDAQ:QCRH) and 1st Source (NASDAQ:SRCE)

QCR (NASDAQ:QCRH) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Analyst Recommendations

This is a summary of current ratings for QCR and 1st Source, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
QCR	0	3	3	0	2.50
1st Source	0	3	2	0	2.40

QCR currently has a consensus target price of $90.00, indicating a potential upside of 4.31%. 1st Source has a consensus target price of $72.67, indicating a potential upside of 12.31%. Given 1st Source’s higher possible upside, analysts clearly believe 1st Source is more favorable than QCR.

Volatility and Risk

QCR has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Earnings and Valuation

This table compares QCR and 1st Source”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
QCR	$597.39 million	2.43	$113.85 million	$7.16	12.05
1st Source	$574.21 million	2.75	$132.62 million	$6.01	10.77

1st Source has lower revenue, but higher earnings than QCR. 1st Source is trading at a lower price-to-earnings ratio than QCR, indicating that it is currently the more affordable of the two stocks.

Dividends

QCR pays an annual dividend of $0.24 per share and has a dividend yield of 0.3%. 1st Source pays an annual dividend of $1.60 per share and has a dividend yield of 2.5%. QCR pays out 3.4% of its earnings in the form of a dividend. 1st Source pays out 26.6% 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 raised its dividend for 38 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares QCR and 1st Source’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
QCR	20.64%	12.04%	1.35%
1st Source	24.97%	12.25%	1.68%

Institutional and Insider Ownership

70.0% of QCR shares are held by institutional investors. Comparatively, 74.5% of 1st Source shares are held by institutional investors. 3.7% of QCR shares are held by company insiders. Comparatively, 19.6% of 1st Source shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

1st Source beats QCR on 10 of the 17 factors compared between the two stocks.

About QCR

QCR Holdings, Inc., a multi-bank holding company, provides commercial and consumer banking, and trust and asset management services. The company’s deposit products include noninterest-bearing demand, interest-bearing demand, time, and brokered deposits. It also provides various commercial and retail lending/leasing, and investment services to corporations, partnerships, individuals, and government agencies. The company’s loan portfolio comprises loans to small and mid-sized businesses; business loans, including lines of credit for working capital and operational purposes; term loans for the acquisition of facilities, equipment, and other purposes; commercial and residential real estate loans; and installment and other consumer loans, such as home improvement, home equity, motor vehicle, and signature loans, as well as small personal credit lines. In addition, it engages in leasing of machinery and equipment to commercial and industrial businesses under direct financing lease contracts; and issuance of trust preferred securities. QCR Holdings, Inc. was incorporated in 1993 and is headquartered in Moline, Illinois.

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.