First Financial (NASDAQ: BUSE) and First Busey (NASDAQ:BUSE) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

53.1% of First Financial shares are held by institutional investors. Comparatively, 48.9% of First Busey shares are held by institutional investors. 3.7% of First Financial shares are held by insiders. Comparatively, 11.2% of First Busey 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.

Profitability

This table compares First Financial and First Busey’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Financial 22.50% 9.91% 1.41%
First Busey 21.51% 9.97% 1.21%

Valuation & Earnings

This table compares First Financial and First Busey’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Financial $150.13 million 4.22 $29.13 million $2.90 17.81
First Busey $308.78 million 4.95 $62.72 million $1.61 19.47

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

Dividends

First Financial pays an annual dividend of $1.02 per share and has a dividend yield of 2.0%. First Busey pays an annual dividend of $0.80 per share and has a dividend yield of 2.6%. First Financial pays out 35.2% of its earnings in the form of a dividend. First Busey pays out 49.7% 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. First Financial has increased its dividend for 31 consecutive years and First Busey has increased its dividend for 4 consecutive years.

Volatility and Risk

First Financial has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500. Comparatively, First Busey has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for First Financial and First Busey, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Financial 0 1 0 0 2.00
First Busey 0 2 3 0 2.60

First Financial presently has a consensus target price of $50.00, indicating a potential downside of 3.19%. First Busey has a consensus target price of $33.75, indicating a potential upside of 7.66%. Given First Busey’s stronger consensus rating and higher possible upside, analysts clearly believe First Busey is more favorable than First Financial.

Summary

First Busey beats First Financial on 11 of the 17 factors compared between the two stocks.

First Financial Company Profile

First Financial Corporation, through its subsidiaries, provides various financial services. The company offers commercial, mortgage, and consumer lending; lease financing; trust account; depositor; and insurance services. Its deposit products include interest-bearing and non-interest-bearing demand deposits, savings deposits, time deposits, and other time deposits; and loan products comprise commercial real estate loans, commercial loans, consumer loans, and residential real estate and construction loans. The company operates 66 branches in West-Central Indiana and East-Central Illinois. It also rents an office building. The company was founded in 1984 and is headquartered in Terre Haute, Indiana.

First Busey Company Profile

First Busey Corporation operates as the bank holding company for Busey Bank that provides retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. The company operates in three segments: Banking, Remittance Processing, and Wealth Management. It offers customary types of demand and savings deposits; and commercial, agricultural, commercial and residential real estate, and consumer loans, as well as home equity lines of credit. The company also provides money transfer, safe deposit, IRA, Keogh and other fiduciary, ATM and technology-based networks, and online and mobile banking services. In addition, it offers investment management, trust, estate advisory, and financial planning services, as well as business succession planning, and employee retirement planning services; investment strategy consulting and fiduciary services; and security brokerage services. Further, the company provides pay processing solutions, such as walk-in payment processing for payments delivered by customers to retail pay agents; online bill payment solutions for payments made by customers on a billing company's Website; customer service payments for payments accepted over the telephone; direct debit services; electronic concentration of payments delivered by the automated clearing house network; money management software and credit card networks; and lockbox remittance processing of payments delivered by mail. It has 28 banking centers in Illinois; 7 in southwest Florida; and 1 in Indianapolis, Indiana. First Busey Corporation was founded in 1868 and is headquartered in Champaign, Illinois.

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