Critical Comparison: Enterprise Financial Services (NASDAQ:EFSC) vs. Lakeland Financial (NASDAQ:LKFN)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Enterprise Financial Services	19.98%	10.98%	1.25%
Lakeland Financial	23.23%	13.77%	1.43%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Enterprise Financial Services	$593.12 million	3.31	$185.27 million	$5.14	10.31
Lakeland Financial	$262.76 million	5.67	$93.48 million	$3.79	15.39

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Enterprise Financial Services and Lakeland Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Enterprise Financial Services	0	1	3	0	2.75
Lakeland Financial	0	2	2	0	2.50

Enterprise Financial Services currently has a consensus target price of $65.67, indicating a potential upside of 23.95%. Lakeland Financial has a consensus target price of $68.67, indicating a potential upside of 17.72%. Given Enterprise Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Enterprise Financial Services is more favorable than Lakeland Financial.

Institutional and Insider Ownership

72.2% of Enterprise Financial Services shares are owned by institutional investors. Comparatively, 81.2% of Lakeland Financial shares are owned by institutional investors. 2.3% of Enterprise Financial Services shares are owned by insiders. Comparatively, 3.0% of Lakeland Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Enterprise Financial Services pays an annual dividend of $1.28 per share and has a dividend yield of 2.4%. Lakeland Financial pays an annual dividend of $2.00 per share and has a dividend yield of 3.4%. Enterprise Financial Services pays out 24.9% of its earnings in the form of a dividend. Lakeland Financial pays out 52.8% 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. Enterprise Financial Services has increased its dividend for 11 consecutive years and Lakeland Financial has increased its dividend for 14 consecutive years. Lakeland Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Enterprise Financial Services has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Lakeland Financial has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Summary

Lakeland Financial beats Enterprise Financial Services on 9 of the 17 factors compared between the two stocks.

About Enterprise Financial Services

Enterprise Financial Services Corp operates as the holding company for Enterprise Bank & Trust that offers banking and wealth management services to individuals and corporate customers primarily in Arizona, California, Florida, Kansas, Missouri, Nevada, and New Mexico. It provides checking, savings, money market accounts, and certificates of deposit. The company also provides commercial and industrial, commercial real estate, real estate construction and development, residential real estate, small business administration, agricultural, consumer, and other loan products. In addition, it offers treasury management and international trade services; tax credit brokerage services; life insurance premium and sponsor finance; tax credit related lending; other deposit accounts, such as community associations, property management, third party escrow, and trust services; treasury management product and services; customized solutions and products; cash management; fiduciary, investment management, and financial advisory services; and customer hedging products, including international banking, card services, and tax credit businesses. Further, the company provides online, device applications, text, and voice banking; remote deposit capture; internet banking, mobile banking, cash management, positive pay services, fraud detection and prevention, automated payables, check image, and statement and document imaging; and controlled disbursements, repurchase agreements, and sweep investment accounts. Enterprise Financial Services Corp was founded in 1988 and is headquartered in Clayton, Missouri.

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.