Financial Analysis: Independent Bank Corp. (INDB) vs. MB Financial (MBFI)
Independent Bank Corp. (NASDAQ: INDB) and MB Financial (NASDAQ:MBFI) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.
Valuation & Earnings
This table compares Independent Bank Corp. and MB Financial’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Independent Bank Corp.||$316.23 million||6.20||$82.86 million||$3.02||23.68|
|MB Financial||$928.92 million||4.19||$196.30 million||$2.34||19.83|
MB Financial has higher revenue and earnings than Independent Bank Corp.. MB Financial is trading at a lower price-to-earnings ratio than Independent Bank Corp., indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
76.4% of Independent Bank Corp. shares are held by institutional investors. Comparatively, 74.8% of MB Financial shares are held by institutional investors. 2.7% of Independent Bank Corp. shares are held by insiders. Comparatively, 4.9% of MB Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a breakdown of recent ratings and target prices for Independent Bank Corp. and MB Financial, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Independent Bank Corp.||0||4||0||0||2.00|
Independent Bank Corp. presently has a consensus target price of $70.67, indicating a potential downside of 1.17%. MB Financial has a consensus target price of $46.75, indicating a potential upside of 0.75%. Given MB Financial’s stronger consensus rating and higher probable upside, analysts clearly believe MB Financial is more favorable than Independent Bank Corp..
Independent Bank Corp. pays an annual dividend of $1.28 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 1.8%. Independent Bank Corp. pays out 42.4% of its earnings in the form of a dividend. MB Financial pays out 35.9% 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. MB Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Independent Bank Corp. and MB Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Independent Bank Corp.||23.48%||9.76%||1.11%|
Risk & Volatility
Independent Bank Corp. has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, MB Financial has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.
MB Financial beats Independent Bank Corp. on 9 of the 16 factors compared between the two stocks.
About Independent Bank Corp.
Independent Bank Corp. is a bank holding company. The Company operates through its subsidiary, Rockland Trust Company (the Bank). The Bank is a community-oriented commercial bank. Its community banking business provides a range of banking services, including lending activities, acceptance of demand, savings, and time deposits, and investment management. As of December 31, 2016, the bank had operated 80 full service and three limited service retail branches, 11 commercial banking centers, five investment management offices and one mortgage lending center, all of which located in Eastern Massachusetts. The Bank classifies loans as commercial loans, consumer real estate loans, or other consumer loans. Commercial loans consist of commercial and industrial loans, commercial real estate loans, commercial construction loans, and small business loans. The Bank offers a range of demand deposits, interest checking, money market accounts, savings accounts and time certificates of deposit.
About MB Financial
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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