Comparing Eagle Financial Services (OTCMKTS:EFSI) and Southside Bancshares (NASDAQ:SBSI)

Eagle Financial Services (OTCMKTS:EFSI) and Southside Bancshares (NASDAQ:SBSI) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, risk and valuation.

Insider and Institutional Ownership

0.3% of Eagle Financial Services shares are owned by institutional investors. Comparatively, 55.7% of Southside Bancshares shares are owned by institutional investors. 8.7% of Eagle Financial Services shares are owned by insiders. Comparatively, 6.0% of Southside Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Eagle Financial Services and Southside Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Financial Services	$59.17 million	3.40	$15.34 million	$2.16	17.31
Southside Bancshares	$260.02 million	3.17	$88.49 million	$2.82	9.73

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

Dividends

Eagle Financial Services pays an annual dividend of $1.24 per share and has a dividend yield of 3.3%. Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 5.2%. Eagle Financial Services pays out 57.4% of its earnings in the form of a dividend. Southside Bancshares pays out 51.1% 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. Southside Bancshares has raised its dividend for 30 consecutive years. Southside Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Eagle Financial Services has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, Southside Bancshares has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Eagle Financial Services and Southside Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Financial Services	0	0	0	0	0.00
Southside Bancshares	0	3	0	0	2.00

Southside Bancshares has a consensus target price of $34.50, indicating a potential upside of 25.75%. Given Southside Bancshares’ stronger consensus rating and higher possible upside, analysts plainly believe Southside Bancshares is more favorable than Eagle Financial Services.

Profitability

This table compares Eagle Financial Services and Southside Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Financial Services	13.59%	10.92%	0.67%
Southside Bancshares	19.40%	11.10%	1.06%

Summary

Southside Bancshares beats Eagle Financial Services on 14 of the 16 factors compared between the two stocks.

About Eagle Financial Services

Eagle Financial Services, Inc. operates as the bank holding company for Bank of Clarke that provides various retail and commercial banking products and services in the Shenandoah Valley, Northern Virginia and Frederick, Maryland. It operates through three segments: Community Banking, Marine Lending, and Wealth Management. The company's deposit products include checking, NOW, money market, and regular savings accounts; and demand and time deposits. Its loan portfolio comprises one-to-four-family residential real estate, commercial real estate, construction and land development, and commercial and industrial loans, as well as secured and unsecured consumer loans, which include personal installment loans, personal lines of credit, automobile loans, and credit card loans. The company also offers fiduciary services; advisory services and investment products, including individual retirement accounts, mutual funds, tax-deferred annuities, 529 college savings plans, life insurance, long term care insurance, brokerage certificates of deposit, and other brokerage services; non-deposit investment products; and title insurance products. In addition, it provides ATM and debit cards; online bill payment services; wealth management services; and telephone, internet, and mobile banking services, as well as other commercial deposit account services, such as ACH origination and remote deposit capture services. The company operates through full-service branches, loan production offices, drive-through only facility, and ATM locations in the Virginia communities of Berryville, Winchester, Boyce, Stephens City, Purcellville, Warrenton, Leesburg, Ashburn, and Fairfax, as well as Maryland community of Frederick. Eagle Financial Services, Inc. was founded in 1881 and is headquartered in Berryville, Virginia.

About Southside Bancshares

Southside Bancshares, Inc. operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations. Its deposit products include savings, money market, and interest and noninterest bearing checking accounts, as well as certificates of deposits. The company’s loan portfolio comprises consumer loans that include 1-4 family residential loans, home equity loans, home improvement loans, automobile loans, and other consumer related loans; commercial loans, such as short-term working capital loans for inventory and accounts receivable, short and medium-term loans for equipment or other business capital expansion, commercial real estate loans, and municipal loans; and construction loans for 1-4 family residential and commercial real estate. It also offers wealth management and trust services consisting of investment management, administration of irrevocable, revocable, and testamentary trusts, estate administration, and custodian services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. In addition, the company provides retirement and employee benefit accounts, including plans and profit sharing plans; and telephone, internet, and mobile banking services. The company offers various banking services through branches, drive-thru facilities, automated teller machines, and interactive teller machines. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.