Head-To-Head Analysis: QCR (NASDAQ:QCRH) versus Independent Bank (NASDAQ:IBCP)

Independent Bank (NASDAQ:IBCP) and QCR (NASDAQ:QCRH) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

79.4% of Independent Bank shares are held by institutional investors. Comparatively, 70.0% of QCR shares are held by institutional investors. 5.7% of Independent Bank shares are held by company insiders. Comparatively, 3.7% of QCR shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Independent Bank and QCR”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$222.04 million	3.08	$66.79 million	$3.26	10.13
QCR	$344.54 million	4.16	$113.85 million	$7.16	11.90

QCR has higher revenue and earnings than Independent Bank. Independent Bank is trading at a lower price-to-earnings ratio than QCR, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Independent Bank and QCR, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	3	1	0	2.25
QCR	0	3	3	0	2.50

Independent Bank currently has a consensus price target of $36.00, suggesting a potential upside of 9.02%. QCR has a consensus price target of $90.00, suggesting a potential upside of 5.65%. Given Independent Bank’s higher probable upside, research analysts clearly believe Independent Bank is more favorable than QCR.

Profitability

This table compares Independent Bank and QCR’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank	21.25%	14.54%	1.27%
QCR	20.64%	12.04%	1.35%

Dividends

Independent Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. QCR pays an annual dividend of $0.24 per share and has a dividend yield of 0.3%. Independent Bank pays out 31.9% of its earnings in the form of a dividend. QCR pays out 3.4% 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. Independent Bank has increased its dividend for 11 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Independent Bank has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, QCR has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Summary

QCR beats Independent Bank on 10 of the 17 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

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.