Comparing Independent Bank (NASDAQ:IBCP) and Lakeland Financial (NASDAQ:LKFN)

Lakeland Financial (NASDAQ:LKFN) and Independent Bank (NASDAQ:IBCP) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, institutional ownership, risk, analyst recommendations, profitability, earnings and valuation.

Analyst Ratings

This is a breakdown of current ratings for Lakeland Financial and Independent Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lakeland Financial	0	3	1	0	2.25
Independent Bank	0	4	0	0	2.00

Lakeland Financial presently has a consensus price target of $68.67, suggesting a potential upside of 22.88%. Independent Bank has a consensus price target of $36.00, suggesting a potential upside of 10.16%. Given Lakeland Financial’s stronger consensus rating and higher possible upside, equities analysts plainly believe Lakeland Financial is more favorable than Independent Bank.

Profitability

This table compares Lakeland Financial and Independent Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lakeland Financial	23.23%	13.77%	1.43%
Independent Bank	21.25%	14.54%	1.27%

Insider & Institutional Ownership

81.2% of Lakeland Financial shares are owned by institutional investors. Comparatively, 79.4% of Independent Bank shares are owned by institutional investors. 3.0% of Lakeland Financial shares are owned by company insiders. Comparatively, 5.7% of Independent Bank shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Lakeland Financial pays an annual dividend of $2.00 per share and has a dividend yield of 3.6%. Independent Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.2%. Lakeland Financial pays out 52.8% of its earnings in the form of a dividend. Independent Bank pays out 31.9% 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. Lakeland Financial has increased its dividend for 14 consecutive years and Independent Bank has increased its dividend for 11 consecutive years. Lakeland Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Lakeland Financial and Independent Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lakeland Financial	$262.76 million	5.43	$93.48 million	$3.79	14.74
Independent Bank	$323.14 million	2.09	$66.79 million	$3.26	10.02

Lakeland Financial has higher earnings, but lower revenue than Independent Bank. Independent Bank is trading at a lower price-to-earnings ratio than Lakeland Financial, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Lakeland Financial has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Independent Bank has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500.

Summary

Lakeland Financial beats Independent Bank on 12 of the 17 factors compared between the two stocks.

About Lakeland Financial

Lakeland Financial Corporation operates as the bank holding company for Lake City Bank that provides various banking products and services in the United States. The company accepts various deposit products, such as noninterest bearing, interest-bearing checking, savings, money market, NOW, and demand deposits. Its loan products include commercial and industrial, commercial real estate and multi-family residential, construction, agri-business and agricultural, consumer 1-4 family mortgage, and other commercial and consumer loans. The company also provides retail and merchant credit card services; corporate treasury management, wealth advisory, and trust services; retail brokerage services, including various financial and investment products, such as annuities and life insurance; and mobile business banking and on-line treasury management services. It serves commercial real estate, manufacturing, agriculture, construction, retail, wholesale, finance and insurance, accommodation and food services, and health care industries. The company was founded in 1872 and is headquartered in Warsaw, Indiana.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.