National Bankshares (NASDAQ:NKSH – Get Free Report) and S&T Bancorp (NASDAQ:STBA – Get Free Report) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.
Dividends
National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 3.7%. S&T Bancorp pays an annual dividend of $1.48 per share and has a dividend yield of 2.9%. National Bankshares pays out 44.8% of its earnings in the form of a dividend. S&T Bancorp pays out 37.6% 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. S&T Bancorp has raised its dividend for 13 consecutive years.
Volatility & Risk
National Bankshares has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.
Profitability
This table compares National Bankshares and S&T Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| National Bankshares | 24.08% | 11.09% | 1.14% |
| S&T Bancorp | 25.10% | 10.11% | 1.46% |
Valuation and Earnings
This table compares National Bankshares and S&T Bancorp”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| National Bankshares | $85.32 million | 3.04 | $15.83 million | $3.35 | 12.17 |
| S&T Bancorp | $568.51 million | 3.14 | $134.23 million | $3.94 | 12.84 |
S&T Bancorp has higher revenue and earnings than National Bankshares. National Bankshares is trading at a lower price-to-earnings ratio than S&T Bancorp, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent ratings and target prices for National Bankshares and S&T Bancorp, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| National Bankshares | 0 | 1 | 1 | 0 | 2.50 |
| S&T Bancorp | 0 | 6 | 2 | 0 | 2.25 |
S&T Bancorp has a consensus target price of $52.20, suggesting a potential upside of 3.18%. Given S&T Bancorp’s higher possible upside, analysts plainly believe S&T Bancorp is more favorable than National Bankshares.
Institutional and Insider Ownership
29.7% of National Bankshares shares are owned by institutional investors. Comparatively, 65.2% of S&T Bancorp shares are owned by institutional investors. 3.3% of National Bankshares shares are owned by insiders. Comparatively, 1.2% of S&T Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Summary
S&T Bancorp beats National Bankshares on 13 of the 17 factors compared between the two stocks.
About National Bankshares
National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.
About S&T Bancorp
S&T Bancorp, Inc. is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. The company was founded on March 17, 1983 and is headquartered in Indiana, PA.
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