Community Trust Bancorp (NASDAQ:CTBI) and Franklin Financial Services (NASDAQ:FRAF) Financial Analysis

Community Trust Bancorp (NASDAQ:CTBI) and Franklin Financial Services (NASDAQ:FRAF) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, earnings, profitability and risk.

Dividends

Community Trust Bancorp pays an annual dividend of $2.60 per share and has a dividend yield of 3.7%. Franklin Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.0%. Community Trust Bancorp pays out 42.8% of its earnings in the form of a dividend. Franklin Financial Services pays out 24.8% 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. Community Trust Bancorp has raised its dividend for 44 consecutive years and Franklin Financial Services has raised its dividend for 1 consecutive years. Community Trust Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

60.2% of Community Trust Bancorp shares are held by institutional investors. Comparatively, 24.8% of Franklin Financial Services shares are held by institutional investors. 2.6% of Community Trust Bancorp shares are held by company insiders. Comparatively, 5.9% of Franklin Financial Services shares are held by company 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.

Analyst Recommendations

This is a summary of current ratings and target prices for Community Trust Bancorp and Franklin Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Trust Bancorp	0	2	1	1	2.75
Franklin Financial Services	0	1	1	0	2.50

Community Trust Bancorp currently has a consensus price target of $78.50, indicating a potential upside of 12.61%. Franklin Financial Services has a consensus price target of $68.00, indicating a potential downside of 1.56%. Given Community Trust Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Community Trust Bancorp is more favorable than Franklin Financial Services.

Profitability

This table compares Community Trust Bancorp and Franklin Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community Trust Bancorp	N/A	N/A	N/A
Franklin Financial Services	N/A	N/A	N/A

Earnings & Valuation

This table compares Community Trust Bancorp and Franklin Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Trust Bancorp	$307.11 million	4.12	$110.46 million	$6.08	11.47
Franklin Financial Services	$93.23 million	3.33	$24.70 million	$5.49	12.58

Community Trust Bancorp has higher revenue and earnings than Franklin Financial Services. Community Trust Bancorp is trading at a lower price-to-earnings ratio than Franklin Financial Services, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Community Trust Bancorp has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500. Comparatively, Franklin Financial Services has a beta of -0.02, indicating that its share price is 102% less volatile than the S&P 500.

Summary

Community Trust Bancorp beats Franklin Financial Services on 11 of the 14 factors compared between the two stocks.

About Community Trust Bancorp

Community Trust Bancorp, Inc. operates as the bank holding company for Community Trust Bank, Inc. that engages in the provision of commercial and personal banking, and trust and wealth management services to small and mid-sized communities in eastern, northeastern, central, and south-central Kentucky, as well as southern West Virginia, and northeastern Tennessee. The company accepts time and demand deposits, checking accounts, savings accounts and savings certificates, individual retirement accounts and Keogh plans, and money market accounts. Its loan portfolio includes commercial, construction, mortgage, and personal loans; lease-financing, lines of credit, revolving lines of credit, and term loans, as well as other specialized loans, including asset-based financing; residential and commercial real estate loans; and consumer loans. The company also provides cash management, renting safe deposit boxes, and funds transfer services; issues letters of credit; and acts as a trustee of personal trusts, executor of estates, trustee for employee benefit trusts, and paying agent for bond and stock issues, as well as an investment agent and depositor for securities. In addition, it offers securities brokerage services; debit cards; annuity and life insurance products; and repurchase agreements, as well as mobile, internet banking, and e-statement services. The company was founded in 1903 and is headquartered in Pikeville, Kentucky.

About Franklin Financial Services

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.