Financial Analysis: Enterprise Financial Services (EFSC) versus Community Trust Bancorp (CTBI)

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Enterprise Financial Services (NASDAQ: EFSC) and Community Trust Bancorp (NASDAQ:CTBI) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, valuation, analyst recommendations, institutional ownership and dividends.

Analyst Ratings

This is a summary of current recommendations for Enterprise Financial Services and Community Trust Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enterprise Financial Services 0 1 1 0 2.50
Community Trust Bancorp 0 0 0 0 N/A

Enterprise Financial Services presently has a consensus price target of $50.25, suggesting a potential downside of 9.78%. Given Enterprise Financial Services’ higher possible upside, analysts clearly believe Enterprise Financial Services is more favorable than Community Trust Bancorp.

Valuation and Earnings

This table compares Enterprise Financial Services and Community Trust Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enterprise Financial Services $236.93 million 5.43 $48.19 million $2.58 21.59
Community Trust Bancorp $204.20 million 4.56 $51.49 million $2.80 18.77

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

Profitability

This table compares Enterprise Financial Services and Community Trust Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enterprise Financial Services 22.60% 12.21% 1.28%
Community Trust Bancorp 26.71% 10.24% 1.30%

Institutional and Insider Ownership

74.6% of Enterprise Financial Services shares are owned by institutional investors. Comparatively, 57.0% of Community Trust Bancorp shares are owned by institutional investors. 2.6% of Enterprise Financial Services shares are owned by insiders. Comparatively, 4.8% of Community Trust Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Enterprise Financial Services has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, Community Trust Bancorp has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.

Dividends

Enterprise Financial Services pays an annual dividend of $0.44 per share and has a dividend yield of 0.8%. Community Trust Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 2.5%. Enterprise Financial Services pays out 17.1% of its earnings in the form of a dividend. Community Trust Bancorp pays out 47.1% 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. Community Trust Bancorp has raised its dividend for 37 consecutive years. Community Trust Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Enterprise Financial Services beats Community Trust Bancorp on 9 of the 16 factors compared between the two stocks.

Enterprise Financial Services Company Profile

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. The company offers demand deposits, interest-bearing transaction accounts, money market accounts, and savings deposits, as well as certificates of deposit. Its loan portfolio comprises commercial and industrial, commercial real estate, real estate construction and development, residential real estate, and consumer loans. In addition, the company provides treasury management and international trade services; tax credit brokerage services consisting of the acquisition of tax credits and sale of these tax credits to clients; and financial and estate planning, investment management, trust, fiduciary, and financial advisory services to businesses, individuals, institutions, retirement plans, and non-profit organizations. As of December 31, 2017, it had 19 banking locations and 5 limited service facilities in the St. Louis metropolitan area; 7 banking locations in the Kansas City metropolitan area; and 2 banking locations in the Phoenix metropolitan area. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.

Community Trust Bancorp Company Profile

Community Trust Bancorp, Inc. operates as the bank holding company for Community Trust Bank, Inc. that provides commercial and personal banking services to small and mid-sized communities. The company accepts time and demand deposits, Keogh plans, and savings certificates, as well as checking and savings, individual retirement, NOW, and money market accounts. It also offers loan products, such as commercial and residential real estate loans; commercial, construction and development, mortgage, and personal loans, as well as consumer, and secured and unsecured loans; and lease-financing, lines of credit, revolving lines of credit, and term loans, as well as other specialized loans, including asset-based financing. In addition, the company provides cash management, safe deposit boxes rental, and funds transfer services; issues letters of credit; and acts as a trustee of personal trusts, executor of estates, trustee for employee benefit trusts, and paying agent for bond and stock issues, as well as an investment agent and depositor for securities. Further, it offers full service securities brokerage, and trust and wealth management services; debit cards; annuity and life insurance products; and repurchase agreements. As of January 26, 2018, the company operated 70 banking locations in eastern, northeastern, central, and south central Kentucky; 6 banking locations in southern West Virginia; 4 banking locations in northeastern Tennessee; 4 trust offices in Kentucky; and 1 trust office in Tennessee. Community Trust Bancorp, Inc. was founded in 1903 and is headquartered in Pikeville, Kentucky.

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