South Plains Financial (NASDAQ:SPFI) & SmartFinancial (NASDAQ:SMBK) Critical Contrast

SmartFinancial (NASDAQ:SMBK) and South Plains Financial (NASDAQ:SPFI) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, risk, valuation and profitability.

Analyst Ratings

This is a summary of current recommendations for SmartFinancial and South Plains Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SmartFinancial	0	3	3	0	2.50
South Plains Financial	0	1	6	0	2.86

SmartFinancial currently has a consensus target price of $52.60, suggesting a potential upside of 7.01%. South Plains Financial has a consensus target price of $49.60, suggesting a potential upside of 13.23%. Given South Plains Financial’s stronger consensus rating and higher possible upside, analysts clearly believe South Plains Financial is more favorable than SmartFinancial.

Volatility and Risk

SmartFinancial has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, South Plains Financial has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Valuation and Earnings

This table compares SmartFinancial and South Plains Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SmartFinancial	$220.61 million	3.81	$36.14 million	$3.68	13.36
South Plains Financial	$296.89 million	2.78	$58.47 million	$3.77	11.62

South Plains Financial has higher revenue and earnings than SmartFinancial. South Plains Financial is trading at a lower price-to-earnings ratio than SmartFinancial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SmartFinancial and South Plains Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SmartFinancial	12.67%	7.33%	0.71%
South Plains Financial	21.23%	12.81%	1.44%

Institutional and Insider Ownership

58.8% of SmartFinancial shares are owned by institutional investors. Comparatively, 54.9% of South Plains Financial shares are owned by institutional investors. 6.9% of SmartFinancial shares are owned by company insiders. Comparatively, 24.3% of South Plains Financial shares are owned by company 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.

Dividends

SmartFinancial pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. South Plains Financial pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. SmartFinancial pays out 9.8% of its earnings in the form of a dividend. South Plains Financial 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. SmartFinancial has raised its dividend for 3 consecutive years and South Plains Financial has raised its dividend for 5 consecutive years. South Plains Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

South Plains Financial beats SmartFinancial on 12 of the 17 factors compared between the two stocks.

About SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, and Florida. It operates through Commercial Real Estate, Consumer Real Estate, Construction and Land Development, Commercial and Industrial, Leases, and Consumer and Other segments. The company offers noninterest-bearing and interest-bearing checking, interest-bearing demand, savings, money market, time deposit, individual retirement accounts, as well as certificates of deposit. It also provides commercial and residential real estate, consumer real estate, and construction and land development loans; commercial and financial loans and leases; commercial business and mortgage loans; and direct consumer installment, educational, agriculture, and other revolving credit loans; equipment financing, heavy equipment, semis, and trailers loans and leases to small and mid-size companies; letters of credit; and overdraft facilities. In addition, the company offers wealth management, insurance, mortgage origination, and internet and mobile banking services. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, Texas.