First Capital (NASDAQ:FCAP) and 1st Source (NASDAQ:SRCE) Head-To-Head Contrast

First Capital (NASDAQ:FCAP) and 1st Source (NASDAQ:SRCE) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

Profitability

This table compares First Capital and 1st Source’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Capital	27.14%	13.67%	1.49%
1st Source	28.85%	13.57%	1.97%

Dividends

First Capital pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. 1st Source pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. First Capital pays out 22.4% of its earnings in the form of a dividend. 1st Source pays out 24.3% 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 Capital has increased its dividend for 2 consecutive years and 1st Source has increased its dividend for 38 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for First Capital and 1st Source, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Capital	0	0	2	0	3.00
1st Source	0	3	1	1	2.60

1st Source has a consensus target price of $91.67, indicating a potential upside of 4.92%. Given 1st Source’s higher probable upside, analysts plainly believe 1st Source is more favorable than First Capital.

Valuation and Earnings

This table compares First Capital and 1st Source”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Capital	$65.31 million	3.23	$16.37 million	$5.72	11.06
1st Source	$462.41 million	4.55	$158.28 million	$7.41	11.79

1st Source has higher revenue and earnings than First Capital. First Capital is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

11.7% of First Capital shares are owned by institutional investors. Comparatively, 74.4% of 1st Source shares are owned by institutional investors. 4.1% of First Capital shares are owned by insiders. Comparatively, 20.2% of 1st Source shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility & Risk

First Capital has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Summary

1st Source beats First Capital on 13 of the 18 factors compared between the two stocks.

About First Capital

First Capital, Inc. is a bank holding company headquartered in Corydon, Indiana. Through its subsidiary, First Harrison Bank, the company provides community banking services to individuals, families, businesses and organizations. First Harrison Bank offers deposit products, residential and commercial real estate lending, consumer loans, commercial loans and other financing solutions. Its services also include online and mobile banking, cash-management tools and related banking products designed to support personal and business financial needs.

About 1st Source

1st Source Corporation is a bank holding company headquartered in South Bend, Indiana. Through 1st Source Bank and its affiliated businesses, the company provides commercial and consumer banking services, including deposits, loans, cash management and wealth management. The company also operates specialty finance businesses that provide financing for aircraft, construction equipment, vehicles and other commercial assets. These services extend beyond its regional banking footprint to customers in a range of U.S. markets.