South Plains Financial (NASDAQ:SPFI) & SmartFinancial (NASDAQ:SMBK) Critical Review

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

Profitability

This table compares South Plains Financial and SmartFinancial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Plains Financial	21.23%	12.81%	1.44%
SmartFinancial	12.67%	7.33%	0.71%

Analyst Ratings

This is a summary of recent ratings and recommmendations for South Plains Financial and SmartFinancial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Plains Financial	0	1	6	0	2.86
SmartFinancial	0	3	3	0	2.50

South Plains Financial presently has a consensus target price of $49.60, suggesting a potential upside of 13.23%. SmartFinancial has a consensus target price of $52.60, suggesting a potential upside of 7.01%. Given South Plains Financial’s stronger consensus rating and higher probable upside, analysts clearly believe South Plains Financial is more favorable than SmartFinancial.

Dividends

South Plains Financial pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. SmartFinancial pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. South Plains Financial pays out 19.1% of its earnings in the form of a dividend. SmartFinancial pays out 9.8% 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. South Plains Financial has increased its dividend for 5 consecutive years and SmartFinancial has increased its dividend for 3 consecutive years. South Plains Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

South Plains Financial has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, SmartFinancial has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Earnings & Valuation

This table compares South Plains Financial and SmartFinancial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Plains Financial	$296.89 million	2.78	$58.47 million	$3.77	11.62
SmartFinancial	$220.61 million	3.81	$36.14 million	$3.68	13.36

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

Insider and Institutional Ownership

54.9% of South Plains Financial shares are held by institutional investors. Comparatively, 58.8% of SmartFinancial shares are held by institutional investors. 24.3% of South Plains Financial shares are held by insiders. Comparatively, 6.9% of SmartFinancial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

South Plains Financial beats SmartFinancial on 12 of the 17 factors compared between the two stocks.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, Texas.

About SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, and Florida. It operates through Commercial Real Estate, Consumer Real Estate, Construction and Land Development, Commercial and Industrial, Leases, and Consumer and Other segments. The company offers noninterest-bearing and interest-bearing checking, interest-bearing demand, savings, money market, time deposit, individual retirement accounts, as well as certificates of deposit. It also provides commercial and residential real estate, consumer real estate, and construction and land development loans; commercial and financial loans and leases; commercial business and mortgage loans; and direct consumer installment, educational, agriculture, and other revolving credit loans; equipment financing, heavy equipment, semis, and trailers loans and leases to small and mid-size companies; letters of credit; and overdraft facilities. In addition, the company offers wealth management, insurance, mortgage origination, and internet and mobile banking services. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.