Critical Analysis: First Busey (NASDAQ:BUSE) and First Interstate BancSystem (NASDAQ:FIBK)

First Busey (NASDAQ:BUSE) and First Interstate BancSystem (NASDAQ:FIBK) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.

Dividends

First Busey pays an annual dividend of $1.04 per share and has a dividend yield of 3.6%. First Interstate BancSystem pays an annual dividend of $1.88 per share and has a dividend yield of 5.1%. First Busey pays out 46.2% of its earnings in the form of a dividend. First Interstate BancSystem pays out 61.2% 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 Busey has raised its dividend for 10 consecutive years.

Insider & Institutional Ownership

56.5% of First Busey shares are held by institutional investors. Comparatively, 88.7% of First Interstate BancSystem shares are held by institutional investors. 3.8% of First Busey shares are held by company insiders. Comparatively, 8.0% of First Interstate BancSystem shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

First Busey has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, First Interstate BancSystem has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.

Profitability

This table compares First Busey and First Interstate BancSystem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Busey	19.16%	10.19%	1.36%
First Interstate BancSystem	22.64%	9.13%	1.16%

Valuation and Earnings

This table compares First Busey and First Interstate BancSystem”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Busey	$1.04 billion	2.31	$135.26 million	$2.25	12.68
First Interstate BancSystem	$1.41 billion	2.53	$302.10 million	$3.07	11.96

First Interstate BancSystem has higher revenue and earnings than First Busey. First Interstate BancSystem is trading at a lower price-to-earnings ratio than First Busey, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for First Busey and First Interstate BancSystem, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Busey	0	3	4	0	2.57
First Interstate BancSystem	2	4	2	0	2.00

First Busey currently has a consensus target price of $27.50, indicating a potential downside of 3.58%. First Interstate BancSystem has a consensus target price of $37.00, indicating a potential upside of 0.79%. Given First Interstate BancSystem’s higher possible upside, analysts clearly believe First Interstate BancSystem is more favorable than First Busey.

Summary

First Interstate BancSystem beats First Busey on 10 of the 17 factors compared between the two stocks.

About First Busey

First Busey Corporation operates as the bank holding company for Busey Bank that engages in the provision of retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. It operates through three segments: Banking, Wealth Management, and FirsTech. The Banking segment provides banking services to individual customers, such as demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as loan products, including residential real estate, home equity lines of credit, and consumer loans. This segment also offers banking services to corporate customers, including commercial, commercial real estate, real estate construction, and agricultural loans, as well as cash management services. The Wealth Management segment offers a range of investment and asset management, investment, brokerage, investment strategy consulting, fiduciary, philanthropic advisory, tax preparation, business succession planning, and employee retirement plan services to individuals, businesses, and foundations; and professional farm management services to the agricultural industry. The FirsTech segment provides payment technology solutions comprising online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments, as well as tools to help clients with billing, reconciliation, bill reminders, and treasury services. The company was founded in 1868 and is headquartered in Champaign, Illinois.

About First Interstate BancSystem

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States. It offers various traditional depository products, including checking, savings, and time deposits; and repurchase agreements primarily for commercial and municipal depositors. The company also offers real estate loans comprising commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans comprising direct personal loans, credit card loans and lines of credit, and indirect loans; variable and fixed rate commercial loans for small and medium-sized manufacturing, wholesale, retail, and service businesses for working capital needs and business expansions; and agricultural loans. In addition, it provides a range of trust, employee benefit, investment management, insurance, agency, and custodial services to individuals, businesses, and nonprofit organizations. Further, the company offers marketing, credit review, loan servicing, credit cards issuance and servicing, mortgage loan sales and servicing, indirect consumer loan purchasing and processing, loan collection services, other operational, and specialized staff support services, as well as online and mobile banking services. The company serves individuals, businesses, municipalities, and other entities in various industries, including agriculture, construction, education, governmental services, healthcare, hospitality, housing, professional services, real estate development, retail, technology, tourism, and wholesale trade. First Interstate BancSystem, Inc. was incorporated in 1971 and is headquartered in Billings, Montana.