Critical Analysis: First Business Financial Services (NASDAQ:FBIZ) and First Financial Corporation Indiana (NASDAQ:THFF)

First Business Financial Services (NASDAQ:FBIZ) and First Financial Corporation Indiana (NASDAQ:THFF) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Earnings & Valuation

This table compares First Business Financial Services and First Financial Corporation Indiana”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$279.25 million	1.71	$50.32 million	$5.95	9.63
First Financial Corporation Indiana	$347.56 million	2.27	$79.21 million	$6.68	9.91

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

Profitability

This table compares First Business Financial Services and First Financial Corporation Indiana’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	18.02%	14.77%	1.25%
First Financial Corporation Indiana	22.79%	13.02%	1.40%

Volatility and Risk

First Business Financial Services has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, First Financial Corporation Indiana has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Institutional & Insider Ownership

60.1% of First Business Financial Services shares are held by institutional investors. Comparatively, 72.7% of First Financial Corporation Indiana shares are held by institutional investors. 5.0% of First Business Financial Services shares are held by insiders. Comparatively, 5.0% of First Financial Corporation Indiana shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.4%. First Financial Corporation Indiana pays an annual dividend of $2.24 per share and has a dividend yield of 3.4%. First Business Financial Services pays out 22.9% of its earnings in the form of a dividend. First Financial Corporation Indiana pays out 33.5% 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 Business Financial Services has increased its dividend for 13 consecutive years and First Financial Corporation Indiana has increased its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for First Business Financial Services and First Financial Corporation Indiana, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Business Financial Services	0	0	4	0	3.00
First Financial Corporation Indiana	0	3	1	0	2.25

First Business Financial Services currently has a consensus price target of $67.00, suggesting a potential upside of 16.95%. First Financial Corporation Indiana has a consensus price target of $62.00, suggesting a potential downside of 6.36%. Given First Business Financial Services’ stronger consensus rating and higher possible upside, research analysts plainly believe First Business Financial Services is more favorable than First Financial Corporation Indiana.

Summary

First Financial Corporation Indiana beats First Business Financial Services on 9 of the 16 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.

About First Financial Corporation Indiana

First Financial Corporation, through its subsidiaries, provides various financial services. The company offers non-interest-bearing demand, interest-bearing demand, savings, time, and other time deposits. It also provides commercial loans primarily to expand a business or finance asset purchases; residential real estate and residential real estate construction loans; and home equity loans and lines, secured loans, and cash/CD secured and unsecured loans. In addition, the company offers lease financing, trust account, depositor, and insurance services. The company was founded in 1834 and is headquartered in Terre Haute, Indiana.