Critical Analysis: Bank of America (NYSE:BAC) & Nicolet Bankshares (NYSE:NIC)

Bank of America (NYSE:BAC) and Nicolet Bankshares (NYSE:NIC) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Valuation and Earnings

This table compares Bank of America and Nicolet Bankshares’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of America	$171.91 billion	1.65	$26.52 billion	$3.07	11.71
Nicolet Bankshares	$418.83 million	2.75	$61.52 million	$4.06	19.13

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

Institutional & Insider Ownership

70.7% of Bank of America shares are owned by institutional investors. Comparatively, 43.1% of Nicolet Bankshares shares are owned by institutional investors. 0.3% of Bank of America shares are owned by insiders. Comparatively, 16.4% of Nicolet Bankshares shares are owned 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.

Profitability

This table compares Bank of America and Nicolet Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of America	15.42%	11.38%	0.93%
Nicolet Bankshares	14.69%	9.71%	1.14%

Volatility and Risk

Bank of America has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500. Comparatively, Nicolet Bankshares has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Bank of America and Nicolet Bankshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of America	1	7	8	0	2.44
Nicolet Bankshares	0	3	1	0	2.25

Bank of America currently has a consensus target price of $38.29, suggesting a potential upside of 6.52%. Nicolet Bankshares has a consensus target price of $88.50, suggesting a potential upside of 13.96%. Given Nicolet Bankshares’ higher possible upside, analysts plainly believe Nicolet Bankshares is more favorable than Bank of America.

Dividends

Bank of America pays an annual dividend of $0.96 per share and has a dividend yield of 2.7%. Nicolet Bankshares pays an annual dividend of $1.00 per share and has a dividend yield of 1.3%. Bank of America pays out 31.3% of its earnings in the form of a dividend. Nicolet Bankshares pays out 24.6% 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. Bank of America has increased its dividend for 3 consecutive years. Bank of America is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Bank of America beats Nicolet Bankshares on 10 of the 17 factors compared between the two stocks.

About Bank of America

Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. It operates in four segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, and Global Markets. The Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, non-interest and interest-bearing checking accounts, and investment accounts and products; credit and debit cards; residential mortgages, and home equity loans; and direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The GWIM segment provides investment management, brokerage, banking, and trust and retirement products and services; wealth management solutions; and customized solutions, including specialty asset management services. The Global Banking segment offers lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, short-term investing options, and merchant services; working capital management solutions; debt and equity underwriting and distribution, and merger-related and other advisory services; and fixed-income and equity research, and certain market-based services. The Global Markets segment provides market-making, financing, securities clearing, settlement, and custody services; securities and derivative products; and risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products. Bank of America Corporation was founded in 1784 and is based in Charlotte, North Carolina.

About Nicolet Bankshares

Nicolet Bankshares, Inc. operates as the bank holding company for Nicolet National Bank that provides banking products and services for businesses and individuals in Wisconsin and Michigan. The company accepts checking, savings, and money market accounts; various certificates of deposit; and individual retirement accounts. It also offers commercial loans, including commercial, industrial, and business loans and lines of credit; commercial real estate loans; agricultural (AG) production and AG real estate loans; commercial real estate investment real estate loans; construction and land development loans; residential real estate loans, such as residential first lien and junior lien mortgages, home equity loans, lines of credit, and residential construction loans; and consumer loans. In addition, the company provides cash management, international banking, personal brokerage, safe deposit boxes, and trust and fiduciary services, as well as wealth management and retirement plan services. Further, it offers mortgage refinancing; online services, such as commercial, retail, and trust online banking; automated bill payment, mobile banking deposits and account access, and remote deposit capture services; and other services consisting of wire transfers, debit cards, credit cards, pre-paid gift cards, direct deposits, and official bank checks, as well as facilitates crop insurance products. The company was formerly known as Green Bay Financial Corporation and changed its name to Nicolet Bankshares, Inc. in March 2002. The company was incorporated in 2000 and is headquartered in Green Bay, Wisconsin.