Farmers Capital Bank (NASDAQ: FFKT) and CIT Group (NYSE:CIT) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.
This is a breakdown of recent ratings and price targets for Farmers Capital Bank and CIT Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Farmers Capital Bank||0||1||0||0||2.00|
Farmers Capital Bank pays an annual dividend of $0.50 per share and has a dividend yield of 1.2%. CIT Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. Farmers Capital Bank pays out 32.1% of its earnings in the form of a dividend. CIT Group pays out 44.1% 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. Farmers Capital Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Farmers Capital Bank and CIT Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Farmers Capital Bank||14.53%||9.27%||1.07%|
Valuation and Earnings
This table compares Farmers Capital Bank and CIT Group’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Farmers Capital Bank||$80.45 million||3.82||$11.69 million||$1.56||26.22|
|CIT Group||$3.21 billion||2.26||$468.20 million||$1.45||38.29|
CIT Group has higher revenue and earnings than Farmers Capital Bank. Farmers Capital Bank is trading at a lower price-to-earnings ratio than CIT Group, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
49.8% of Farmers Capital Bank shares are held by institutional investors. 3.1% of Farmers Capital Bank shares are held by insiders. Comparatively, 0.5% of CIT Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Volatility and Risk
Farmers Capital Bank has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500. Comparatively, CIT Group has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.
Farmers Capital Bank beats CIT Group on 9 of the 16 factors compared between the two stocks.
Farmers Capital Bank Company Profile
Farmers Capital Bank Corporation is a bank holding company headquartered in Frankfort, Kentucky. Their bank affiliate United Bank & Capital Trust Company operates 34 banking locations in 21 communities throughout Central and Northern Kentucky.
CIT Group Company Profile
CIT Group Inc. (CIT) is a bank holding company (BHC) and a financial holding company (FHC). The Company, together with its subsidiaries, provides financing, leasing and advisory services to middle market companies in a range of industries in North America. The Company’s segments include Commercial Banking, Consumer Banking, Non-Strategic Portfolios, and Corporate and Other. The Commercial Banking segment consists of four divisions: Commercial Finance, Rail, Real Estate Finance, and Business Capital. The Consumer Banking segment includes Retail Banking, Mortgage Lending, and SBA Lending (together referred to as Other Consumer Banking), and Legacy Consumer Mortgages (LCM). The Company’s products and services include account receivables collection, acquisition and expansion financing, asset management and servicing, asset-based loans, debt underwriting and syndication, deposits, enterprise value and cash flow loans, equipment leases, factoring services and financial risk management.
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