First Mid-Illinois Bancshares (NASDAQ: FMBH) and MB Financial (NASDAQ:MBFI) are both financials companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Analyst Recommendations

This is a summary of recent recommendations for First Mid-Illinois Bancshares and MB Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Mid-Illinois Bancshares 0 1 0 0 2.00
MB Financial 0 7 2 0 2.22

First Mid-Illinois Bancshares presently has a consensus target price of $37.00, indicating a potential downside of 3.77%. MB Financial has a consensus target price of $48.25, indicating a potential upside of 11.72%. Given MB Financial’s stronger consensus rating and higher probable upside, analysts clearly believe MB Financial is more favorable than First Mid-Illinois Bancshares.

Valuation & Earnings

This table compares First Mid-Illinois Bancshares and MB Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Mid-Illinois Bancshares $129.89 million 3.75 $26.68 million $2.31 16.65
MB Financial $1.04 billion 3.49 $304.04 million $3.49 12.38

MB Financial has higher revenue and earnings than First Mid-Illinois Bancshares. MB Financial is trading at a lower price-to-earnings ratio than First Mid-Illinois Bancshares, indicating that it is currently the more affordable of the two stocks.

Dividends

First Mid-Illinois Bancshares pays an annual dividend of $0.68 per share and has a dividend yield of 1.8%. MB Financial pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. First Mid-Illinois Bancshares pays out 29.4% of its earnings in the form of a dividend. MB Financial pays out 24.1% 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. MB Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

21.2% of First Mid-Illinois Bancshares shares are owned by institutional investors. Comparatively, 76.5% of MB Financial shares are owned by institutional investors. 20.3% of First Mid-Illinois Bancshares shares are owned by insiders. Comparatively, 7.1% of MB Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

First Mid-Illinois Bancshares has a beta of 0.09, indicating that its share price is 91% less volatile than the S&P 500. Comparatively, MB Financial has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Profitability

This table compares First Mid-Illinois Bancshares and MB Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Mid-Illinois Bancshares 20.54% 9.33% 0.99%
MB Financial 29.25% 8.11% 1.05%

Summary

MB Financial beats First Mid-Illinois Bancshares on 12 of the 16 factors compared between the two stocks.

First Mid-Illinois Bancshares Company Profile

First Mid-Illinois Bancshares, Inc. is a financial holding company. The Company is engaged in the business of banking through its subsidiaries, First Mid-Illinois Bank & Trust, N.A. (First Mid Bank) and First Clover Leaf Bank, N.A. (First Clover Leaf Bank). The Company provides data processing services to affiliates through another subsidiary, Mid-Illinois Data Services, Inc. (MIDS). The Company offers insurance products and services to customers through its subsidiary, The Checkley Agency, Inc., doing business as First Mid Insurance Group (First Mid Insurance). The Company also owns three statutory business trusts, First Mid-Illinois Statutory Trust I (First Mid Trust I), and First Mid-Illinois Statutory Trust II (First Mid Trust II), and Clover Leaf Statutory Trust I (CLST Trust). As of December 31, 2016, the Company operated in three primary lines of business: community banking, wealth management, and insurance brokerage.

MB Financial Company Profile

MB Financial, Inc. (MB Financial) is a financial holding company. The Company’s segments include banking, leasing and mortgage banking. As of December 31, 2016, the Company’s primary market was the Chicago metropolitan area, in which the Company operated 95 banking offices through its bank subsidiary, MB Financial Bank, N.A. (MB Financial Bank). Through MB Financial Bank, the Company offers a range of financial services to small and middle market businesses, and individuals in the markets that the Company serves. MB Financial Bank’s subsidiaries include LaSalle Systems Leasing, Inc. (LaSalle), Celtic Leasing Corp. (Celtic) and MB Equipment Finance, LLC, (MB Equipment Finance). MB Financial Bank also has a majority owned subsidiary with operating activities, Cedar Hill Associates, LLC (Cedar Hill). The Company operates four primary lines of business within its banking segment: commercial banking, lease banking, retail banking and wealth management.

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