Stonegate Bank (NASDAQ: SGBK) and Chemical Financial Corporation (NASDAQ:CHFC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, profitabiliy, risk, institutional ownership and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for Stonegate Bank and Chemical Financial Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stonegate Bank 0 3 0 0 2.00
Chemical Financial Corporation 0 1 2 0 2.67

Stonegate Bank currently has a consensus target price of $49.00, suggesting a potential upside of 5.69%. Chemical Financial Corporation has a consensus target price of $55.00, suggesting a potential upside of 10.51%. Given Chemical Financial Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Chemical Financial Corporation is more favorable than Stonegate Bank.

Risk and Volatility

Stonegate Bank has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500. Comparatively, Chemical Financial Corporation has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Insider & Institutional Ownership

63.6% of Stonegate Bank shares are owned by institutional investors. Comparatively, 79.4% of Chemical Financial Corporation shares are owned by institutional investors. 2.2% of Chemical Financial Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Stonegate Bank and Chemical Financial Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Stonegate Bank $103.92 million 6.83 $32.90 million $2.15 21.56
Chemical Financial Corporation $552.98 million 6.40 $157.18 million $2.21 22.52

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

Profitability

This table compares Stonegate Bank and Chemical Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stonegate Bank 25.96% N/A N/A
Chemical Financial Corporation 21.37% 7.47% 1.06%

Dividends

Stonegate Bank pays an annual dividend of $0.32 per share and has a dividend yield of 0.7%. Chemical Financial Corporation pays an annual dividend of $1.08 per share and has a dividend yield of 2.2%. Stonegate Bank pays out 14.9% of its earnings in the form of a dividend. Chemical Financial Corporation pays out 48.9% 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.

Summary

Chemical Financial Corporation beats Stonegate Bank on 12 of the 16 factors compared between the two stocks.

About Stonegate Bank

Stonegate Bank (the Bank) is a state chartered commercial bank in the State of Florida. The Bank provides a full range of banking services to individual and corporate customers from its branch locations in Southeast and West Florida. The Bank provides personal banking, business banking and wealth management services. The Bank’s loans portfolio includes commercial real estate, construction and land development, residential real estate, commercial and consumer loans. Its personal banking services include checking account, money market, savings account, certificate of deposits, individual retirement accounts, consumer loans and residential mortgage loans. It also offers card services, such as credit cards and debit cards. Its wealth management services include asset management, trust services, estate planning, insurance planning and retirement planning for business owners.

About Chemical Financial Corporation

Chemical Financial Corporation is a financial holding company. The Company operates in the commercial banking segment. The Company, through its subsidiary bank, Chemical Bank, offers banking and fiduciary products and services. These products and services include business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, access to insurance and investment products, corporate and personal wealth management services, and other banking services. As of December 31, 2016, the Corporation and Chemical Bank served these markets through 249 banking offices. In addition to the banking offices, Chemical Bank operated eight loan production offices and over 272 automated teller machines, both on- and off-bank premises, as of December 31, 2016. Its loan portfolio includes commercial and real estate construction.

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