Head to Head Survey: Carter Bankshares (NASDAQ:CARE) and First Business Financial Services (NASDAQ:FBIZ)

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

Volatility and Risk

First Business Financial Services has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Carter Bankshares has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Profitability

This table compares First Business Financial Services and Carter Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	19.28%	14.92%	1.29%
Carter Bankshares	36.79%	7.46%	0.73%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for First Business Financial Services and Carter Bankshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Business Financial Services	0	0	4	1	3.20
Carter Bankshares	0	4	1	0	2.20

First Business Financial Services currently has a consensus price target of $78.25, suggesting a potential upside of 10.32%. Carter Bankshares has a consensus price target of $30.75, suggesting a potential upside of 0.00%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, equities analysts clearly believe First Business Financial Services is more favorable than Carter Bankshares.

Insider and Institutional Ownership

60.1% of First Business Financial Services shares are owned by institutional investors. Comparatively, 41.5% of Carter Bankshares shares are owned by institutional investors. 5.0% of First Business Financial Services shares are owned by insiders. Comparatively, 2.4% of Carter Bankshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 1.9%. Carter Bankshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. First Business Financial Services pays out 20.7% of its earnings in the form of a dividend. Carter Bankshares pays out 6.9% 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. First Business Financial Services has increased its dividend for 13 consecutive years. First Business Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares First Business Financial Services and Carter Bankshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$279.25 million	2.13	$50.32 million	$6.56	10.81
Carter Bankshares	$214.28 million	3.18	$31.00 million	$5.81	5.29

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

Summary

First Business Financial Services beats Carter Bankshares on 15 of the 18 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.

About Carter Bankshares

Carter Bankshares, Inc. operates as the bank holding company for Carter Bank & Trust that provides various banking products and services in the United States. It accepts various deposit products, including checking, savings, retirement, and money market accounts, as well as certificates of deposits. The company also offers commercial loans comprising secured and unsecured loans; consumer loans, such as secured and unsecured loans for financing automobiles, home improvements, education, overdraft protection, and personal investments, as well as residential mortgages; real estate construction, acquisition, commercial, and industrial loans; home equity lines of credit; and credit cards, as well as originates and holds fixed and variable rate mortgage loans. In addition, it provides other banking services that include safe deposit boxes, direct deposit of payroll, and social security checks; online banking products, including online and mobile banking, online account opening, bill pay, e-statement, mobile deposit, digital wallet, and ATM services; title insurance and other financial institution-related products and services; and treasury and corporate cash management services. Carter Bankshares, Inc. was founded in 1974 and is headquartered in Martinsville, Virginia.