First Business Financial Services (NASDAQ: FBIZ) and Hancock Holding (NASDAQ:HBHC) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitability.

Volatility and Risk

First Business Financial Services has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Hancock Holding has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Institutional & Insider Ownership

60.1% of First Business Financial Services shares are owned by institutional investors. Comparatively, 76.9% of Hancock Holding shares are owned by institutional investors. 6.6% of First Business Financial Services shares are owned by insiders. Comparatively, 1.2% of Hancock Holding shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares First Business Financial Services and Hancock Holding’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Business Financial Services $66.32 million 2.96 $11.85 million $1.36 16.54
Hancock Holding $953.35 million 4.51 $215.68 million $2.49 19.92

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for First Business Financial Services and Hancock Holding, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Business Financial Services 0 3 0 0 2.00
Hancock Holding 0 4 4 1 2.67

First Business Financial Services presently has a consensus price target of $24.50, suggesting a potential upside of 8.89%. Hancock Holding has a consensus price target of $51.41, suggesting a potential upside of 3.64%. Given First Business Financial Services’ higher probable upside, equities research analysts plainly believe First Business Financial Services is more favorable than Hancock Holding.

Profitability

This table compares First Business Financial Services and Hancock Holding’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Business Financial Services 12.64% 7.25% 0.66%
Hancock Holding 19.08% 8.27% 0.90%

Dividends

First Business Financial Services pays an annual dividend of $0.52 per share and has a dividend yield of 2.3%. Hancock Holding pays an annual dividend of $0.96 per share and has a dividend yield of 1.9%. First Business Financial Services pays out 38.2% of its earnings in the form of a dividend. Hancock Holding pays out 38.6% 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 Business Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Hancock Holding beats First Business Financial Services on 12 of the 17 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. (FBFS) is a bank holding company. The Company engages in the commercial banking business through its bank subsidiaries, which include First Business Bank (FBB), First Business Bank-Milwaukee (FBB-Milwaukee) and Alterra Bank (Alterra) (FBB and FBB-Milwaukee and, together with FBB, the Banks). The operations of FBFS are conducted through the Banks and certain subsidiaries of FBB. The Banks operate as business banks focusing on delivering a line of commercial banking products, including commercial loans and commercial real estate loans, and services to meet the needs of small- and medium-sized businesses, business owners, executives, professionals and high net worth individuals. Its business lines include commercial lending, asset-based financing, equipment financing, small business administration (SBA) lending, treasury management services, and trust and investment services. Its investments include short-term investments and securities.

About Hancock Holding

Hancock Holding Company is a financial services company that provides a network of service financial choices to the Gulf South region, through its bank subsidiary, Whitney Bank (the Bank), a Mississippi state bank. The Company operates through overall banking operations segment. The Bank operates under brands, such as Hancock Bank in Mississippi, Alabama and Florida, and Whitney Bank in Louisiana and Texas. The Bank operates across the Gulf South region, which consists of southern Mississippi; southern and central Alabama; southern Louisiana; the northern, central, and panhandle regions of Florida; Houston, Texas, and Nashville, Tennessee. The Bank offers a range of traditional and online community banking services to commercial, small business and retail customers, providing a range of transaction and savings deposit products, treasury management services and investment brokerage services, among others.

Receive News & Ratings for First Business Financial Services Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for First Business Financial Services Inc. and related companies with MarketBeat.com's FREE daily email newsletter.