Critical Contrast: DNB Bank ASA (OTCMKTS:DNBBY) vs. 1st Source (NASDAQ:SRCE)

1st Source (NASDAQ:SRCE) and DNB Bank ASA (OTCMKTS:DNBBY) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Risk and Volatility

1st Source has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, DNB Bank ASA has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Institutional and Insider Ownership

74.5% of 1st Source shares are owned by institutional investors. 20.2% of 1st Source shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for 1st Source and DNB Bank ASA, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
1st Source	0	3	2	0	2.40
DNB Bank ASA	2	4	2	0	2.00

1st Source currently has a consensus target price of $89.67, suggesting a potential upside of 3.95%. Given 1st Source’s stronger consensus rating and higher possible upside, analysts clearly believe 1st Source is more favorable than DNB Bank ASA.

Dividends

1st Source pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. DNB Bank ASA pays an annual dividend of $1.42 per share and has a dividend yield of 4.4%. 1st Source pays out 27.6% of its earnings in the form of a dividend. DNB Bank ASA pays out 50.7% 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. 1st Source has raised its dividend for 38 consecutive years.

Earnings and Valuation

This table compares 1st Source and DNB Bank ASA”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
1st Source	$600.00 million	3.46	$158.28 million	$6.52	13.23
DNB Bank ASA	$19.14 billion	2.62	$4.20 billion	$2.80	11.54

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

Profitability

This table compares 1st Source and DNB Bank ASA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
1st Source	28.09%	12.94%	1.87%
DNB Bank ASA	21.34%	13.97%	1.06%

Summary

1st Source beats DNB Bank ASA on 11 of the 16 factors compared between the two stocks.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

About DNB Bank ASA

DNB Bank ASA provides financial services for individual and business customers in Norway and internationally. The company offers savings, current, and pension accounts; fixed rate and security deposits; home and cabin mortgages, car and consumer loans, business loans, and refinancing; car, house, home contents, travel, personal, and non-life insurance product; payment services; and online and mobile banking services, as well as cards. It also provides overdraft facilities; leasing services; factoring, supply chain, and receivable purchase financing services; bank guarantee, secure trading, documentary collection, and letter of credit services; investment banking services, such as mergers and acquisition, equity and debt capital market, shares and securities, mutual funds and trading, and bonds and commodities; and private financing, as well as equity trading, foreign exchange, interest rates, and risk advisory services. In addition, the company offers treasury management, working capital, trade finance, auto lease and equipment financing, and corporate finance services, as well as act as an estate agents. DNB Bank ASA was founded in 1822 and is headquartered in Oslo, Norway.