Pathward Financial (NASDAQ:CASH – Get Free Report) and 1st Source (NASDAQ:SRCE – Get Free Report) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.
Dividends
Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. 1st Source pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. Pathward Financial pays out 2.5% of its earnings in the form of a dividend. 1st Source pays out 27.6% 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. 1st Source has raised its dividend for 38 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Pathward Financial and 1st Source”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Pathward Financial | $851.49 million | 1.75 | $185.87 million | $7.98 | 9.00 |
| 1st Source | $600.00 million | 3.37 | $158.28 million | $6.52 | 12.89 |
Pathward Financial has higher revenue and earnings than 1st Source. Pathward Financial is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for Pathward Financial and 1st Source, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Pathward Financial | 0 | 0 | 3 | 0 | 3.00 |
| 1st Source | 0 | 3 | 1 | 1 | 2.60 |
Pathward Financial currently has a consensus target price of $101.00, indicating a potential upside of 40.57%. 1st Source has a consensus target price of $89.67, indicating a potential upside of 6.67%. Given Pathward Financial’s stronger consensus rating and higher possible upside, research analysts plainly believe Pathward Financial is more favorable than 1st Source.
Insider and Institutional Ownership
92.7% of Pathward Financial shares are held by institutional investors. Comparatively, 74.5% of 1st Source shares are held by institutional investors. 1.4% of Pathward Financial shares are held by company insiders. Comparatively, 20.2% of 1st Source shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Risk and Volatility
Pathward Financial has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.
Profitability
This table compares Pathward Financial and 1st Source’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Pathward Financial | 21.03% | 20.61% | 2.41% |
| 1st Source | 28.09% | 12.94% | 1.87% |
Summary
Pathward Financial beats 1st Source on 11 of the 18 factors compared between the two stocks.
About Pathward Financial
Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.
About 1st Source
1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.
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