Critical Contrast: First Business Financial Services (NASDAQ:FBIZ) versus Old National Bancorp (NASDAQ:ONB)

Old National Bancorp (NASDAQ:ONB) and First Business Financial Services (NASDAQ:FBIZ) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Institutional and Insider Ownership

83.7% of Old National Bancorp shares are held by institutional investors. Comparatively, 60.1% of First Business Financial Services shares are held by institutional investors. 0.9% of Old National Bancorp shares are held by insiders. Comparatively, 5.1% of First Business Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Old National Bancorp has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Valuation & Earnings

This table compares Old National Bancorp and First Business Financial Services”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Old National Bancorp	$2.32 billion	3.58	$539.19 million	$1.71	12.43
First Business Financial Services	$167.56 million	2.54	$44.24 million	$6.08	8.40

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

Dividends

Old National Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 2.6%. First Business Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 2.3%. Old National Bancorp pays out 32.7% of its earnings in the form of a dividend. First Business Financial Services pays out 19.1% 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. First Business Financial Services has increased its dividend for 13 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Old National Bancorp and First Business Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Old National Bancorp	0	4	7	1	2.75
First Business Financial Services	0	0	4	0	3.00

Old National Bancorp currently has a consensus price target of $26.27, indicating a potential upside of 23.58%. First Business Financial Services has a consensus price target of $60.67, indicating a potential upside of 18.84%. Given Old National Bancorp’s higher possible upside, equities analysts plainly believe Old National Bancorp is more favorable than First Business Financial Services.

Profitability

This table compares Old National Bancorp and First Business Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Old National Bancorp	17.39%	14.95%	1.19%
First Business Financial Services	17.59%	14.22%	1.17%

Summary

Old National Bancorp beats First Business Financial Services on 12 of the 18 factors compared between the two stocks.

About Old National Bancorp

Old National Bancorp operates as the bank holding company for Old National Bank that provides various financial services to individual and commercial customers in the United States. It accepts deposit accounts, including noninterest-bearing demand, interest-bearing checking, negotiable order of withdrawal, savings and money market, and time deposits; and offers loans, such as home equity lines of credit, residential real estate loans, consumer loans, commercial loans, commercial real estate loans, agricultural loans, letters of credit, and lease financing. The company also provides debit and automated teller machine cards, telephone access, online banking, and other electronic and mobile banking services; cash management, private banking, brokerage, trust, investment advisory, and other traditional banking services; wealth management, investment, and foreign currency services; and treasury management, merchant, and capital markets services, as well as community development lending and equity investment solutions. The company was founded in 1834 and is headquartered in Evansville, Indiana.

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.