Comparing Enterprise Financial Services (NASDAQ:EFSC) and Old Second Bancorp (NASDAQ:OSBC)

Old Second Bancorp (NASDAQ:OSBC) and Enterprise Financial Services (NASDAQ:EFSC) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Dividends

Old Second Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. Enterprise Financial Services pays an annual dividend of $1.28 per share and has a dividend yield of 2.2%. Old Second Bancorp pays out 17.2% of its earnings in the form of a dividend. Enterprise Financial Services pays out 24.1% 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. Old Second Bancorp has raised its dividend for 1 consecutive years and Enterprise Financial Services has raised its dividend for 11 consecutive years. Enterprise Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

67.8% of Old Second Bancorp shares are held by institutional investors. Comparatively, 72.2% of Enterprise Financial Services shares are held by institutional investors. 3.8% of Old Second Bancorp shares are held by insiders. Comparatively, 2.2% of Enterprise Financial Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Old Second Bancorp and Enterprise Financial Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Old Second Bancorp	$401.54 million	2.58	$80.31 million	$1.63	12.07
Enterprise Financial Services	$1.00 billion	2.11	$201.37 million	$5.31	10.75

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

Analyst Recommendations

This is a summary of current ratings and target prices for Old Second Bancorp and Enterprise Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Old Second Bancorp	0	1	4	0	2.80
Enterprise Financial Services	0	2	2	0	2.50

Old Second Bancorp presently has a consensus price target of $22.63, suggesting a potential upside of 15.03%. Enterprise Financial Services has a consensus price target of $66.00, suggesting a potential upside of 15.59%. Given Enterprise Financial Services’ higher possible upside, analysts clearly believe Enterprise Financial Services is more favorable than Old Second Bancorp.

Risk and Volatility

Old Second Bancorp has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, Enterprise Financial Services has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Profitability

This table compares Old Second Bancorp and Enterprise Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Old Second Bancorp	20.00%	13.36%	1.65%
Enterprise Financial Services	20.15%	10.74%	1.24%

Summary

Enterprise Financial Services beats Old Second Bancorp on 9 of the 17 factors compared between the two stocks.

About Old Second Bancorp

Old Second Bancorp, Inc. operates as the bank holding company for Old Second National Bank that provides community banking services. It offers demand, NOW, money market, savings, time deposit, individual retirement, and checking accounts, as well as certificates of deposit accounts. The company also provides commercial loans; lease financing receivables; commercial real estate loans; construction loans; residential real estate loans, such as residential first mortgage and second mortgage loans; home equity line of credit; consumer loans, including motor vehicle, home improvement, and signature loans; installment and agricultural loans; residential mortgages; and overdraft checking. In addition, it offers safe deposit services; trust and wealth management services; and money orders, cashier’s checks, foreign currency, direct deposits, discount brokerage, debit and credit cards, and other services, as well as acquires the U.S. treasury notes and bonds. Further, the company provides online and mobile banking; corporate cash management products, including remote and mobile deposits capture, investment sweep accounts, zero balance accounts, automated tax payments, automatic teller machines access, telephone banking, lockbox accounts, automated clearing house transactions, account reconciliation, controlled disbursement, detail and general information reporting, foreign and domestic wire transfers, and vault services for currency and coin; and investment, agency, and custodial services for individual, corporate, and not-for-profit clients. Old Second Bancorp, Inc. was incorporated in 1981 and is headquartered in Aurora, Illinois.

About Enterprise Financial Services

Enterprise Financial Services Corp operates as the holding company for Enterprise Bank & Trust that offers banking and wealth management services to individuals and corporate customers primarily in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico. It provides checking, savings, money market accounts, and certificates of deposit. The company also provides commercial and industrial, commercial real estate, real estate construction and development, residential real estate, small business administration, agricultural, consumer, and other loan products. In addition, it offers treasury management and international trade services; tax credit brokerage services; life insurance premium and sponsor finance; tax credit related lending; other deposit accounts, such as community associations, property management, third party escrow, and trust services; treasury management product and services; customized solutions and products; cash management; fiduciary, investment management, and financial advisory services; and customer hedging products, including international banking, card services, and tax credit businesses. Further, the company provides online, device applications, text, and voice banking; remote deposit capture; internet banking, mobile banking, cash management, positive pay services, fraud detection and prevention, automated payables, check image, and statement and document imaging; and controlled disbursements, repurchase agreements, and sweep investment accounts. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.