Live Oak Bancshares (NASDAQ: LOB) and MidWestOne Financial Group (NASDAQ:MOFG) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.
Insider & Institutional Ownership
40.9% of Live Oak Bancshares shares are held by institutional investors. Comparatively, 46.5% of MidWestOne Financial Group shares are held by institutional investors. 30.1% of Live Oak Bancshares shares are held by company insiders. Comparatively, 25.3% of MidWestOne Financial Group shares are held by company 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.
This table compares Live Oak Bancshares and MidWestOne Financial Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Live Oak Bancshares||17.68%||13.60%||1.72%|
|MidWestOne Financial Group||17.35%||7.38%||0.79%|
Valuation and Earnings
This table compares Live Oak Bancshares and MidWestOne Financial Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Live Oak Bancshares||$150.81 million||6.40||$13.77 million||$0.93||26.02|
|MidWestOne Financial Group||$135.76 million||3.10||$20.39 million||$2.03||16.97|
MidWestOne Financial Group has lower revenue, but higher earnings than Live Oak Bancshares. MidWestOne Financial Group is trading at a lower price-to-earnings ratio than Live Oak Bancshares, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for Live Oak Bancshares and MidWestOne Financial Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Live Oak Bancshares||0||1||2||0||2.67|
|MidWestOne Financial Group||0||1||1||0||2.50|
Live Oak Bancshares presently has a consensus target price of $25.67, suggesting a potential upside of 6.06%. MidWestOne Financial Group has a consensus target price of $38.50, suggesting a potential upside of 11.79%. Given MidWestOne Financial Group’s higher probable upside, analysts clearly believe MidWestOne Financial Group is more favorable than Live Oak Bancshares.
Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. MidWestOne Financial Group pays an annual dividend of $0.68 per share and has a dividend yield of 2.0%. Live Oak Bancshares pays out 12.9% of its earnings in the form of a dividend. MidWestOne Financial Group pays out 33.5% 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.
Risk and Volatility
Live Oak Bancshares has a beta of -0.03, meaning that its stock price is 103% less volatile than the S&P 500. Comparatively, MidWestOne Financial Group has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.
Live Oak Bancshares beats MidWestOne Financial Group on 10 of the 16 factors compared between the two stocks.
Live Oak Bancshares Company Profile
Live Oak Bancshares, Inc. is a bank holding company. The Company conducts business operations primarily through its commercial bank subsidiary, Live Oak Banking Company (the Bank). The Bank specializes in providing lending services to small businesses nationwide in targeted industries. The loans originated by the Bank are guaranteed by the small business administration (SBA). The Company’s loan portfolio includes commercial and industrial loans; construction and development loans; commercial real estate, and commercial land. The Company’s investment securities include the United States Government agencies, residential mortgage-backed securities and mutual fund. The Company’s deposits include non-interest-bearing deposits and interest-bearing deposits, such as interest-bearing checking, money market and time deposits.
MidWestOne Financial Group Company Profile
MidWestOne Financial Group, Inc. is a bank holding and financial holding company. The Company operates through its bank subsidiaries, MidWestOne Bank, Central Bank and MidWestOne Insurance Services, Inc. that operates through three agencies located in central and east-central Iowa. As of December 31, 2016, the Bank operated a total of 43 banking offices in Iowa, Minnesota, Wisconsin, and Florida. It provides full service retail banking in the communities in which its branch offices are located and also offers trust and investment management services. The Bank offers deposit products, including checking and other demand deposit accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts and other time deposits. The Bank offers commercial and industrial, agricultural, real estate mortgage and consumer loans.
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