Head to Head Analysis: German American Bancorp (NASDAQ:GABC) & First Business Financial Services (NASDAQ:FBIZ)

German American Bancorp (NASDAQ:GABC) and First Business Financial Services (NASDAQ:FBIZ) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Dividends

German American Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.9%. First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.4%. German American Bancorp pays out 34.3% of its earnings in the form of a dividend. First Business Financial Services pays out 22.4% 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. German American Bancorp has raised its dividend for 13 consecutive years and First Business Financial Services has raised its dividend for 13 consecutive years.

Risk & Volatility

German American Bancorp has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.

Profitability

This table compares German American Bancorp and First Business Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
German American Bancorp	27.09%	12.13%	1.62%
First Business Financial Services	18.16%	14.60%	1.25%

Earnings and Valuation

This table compares German American Bancorp and First Business Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
German American Bancorp	$487.40 million	3.34	$112.64 million	$3.61	12.03
First Business Financial Services	$279.25 million	1.69	$50.32 million	$6.07	9.31

German American Bancorp has higher revenue and earnings than First Business Financial Services. First Business Financial Services is trading at a lower price-to-earnings ratio than German American Bancorp, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and price targets for German American Bancorp and First Business Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
German American Bancorp	0	1	3	0	2.75
First Business Financial Services	0	0	4	0	3.00

German American Bancorp presently has a consensus price target of $47.67, indicating a potential upside of 9.78%. First Business Financial Services has a consensus price target of $65.50, indicating a potential upside of 15.85%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe First Business Financial Services is more favorable than German American Bancorp.

Institutional & Insider Ownership

46.9% of German American Bancorp shares are owned by institutional investors. Comparatively, 60.1% of First Business Financial Services shares are owned by institutional investors. 3.2% of German American Bancorp shares are owned by insiders. Comparatively, 5.0% of First Business Financial Services shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

First Business Financial Services beats German American Bancorp on 9 of the 16 factors compared between the two stocks.

About German American Bancorp

German American Bancorp, Inc. operates as a financial holding company for German American Bank that provides retail and commercial banking services. The company operates through three segments: Core Banking, Wealth Management Services, and Insurance Operations. The Core Banking segment accepts deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Wealth Management segment provides trust, investment advisory, brokerage, and retirement planning services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. It also offers checking, saving, and individual retirement accounts; certificates of deposit; wire transfer; credit cards; home equity, mortgages, and small business; treasury management; and online and mobile banking, bill pay, digital wallet, mobile check deposit, credit score and report, money management, and estatements, as well as wealth advisory. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.