Reviewing Wintrust Financial (NASDAQ:WTFC) & 1st Source (NASDAQ:SRCE)

1st Source (NASDAQ:SRCE) and Wintrust Financial (NASDAQ:WTFC) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Profitability

This table compares 1st Source and Wintrust Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
1st Source	26.66%	12.39%	1.77%
Wintrust Financial	20.11%	13.15%	1.25%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for 1st Source and Wintrust Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
1st Source	0	3	1	1	2.60
Wintrust Financial	0	2	10	1	2.92

1st Source presently has a consensus target price of $77.00, indicating a potential downside of 4.72%. Wintrust Financial has a consensus target price of $168.92, indicating a potential upside of 4.06%. Given Wintrust Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Wintrust Financial is more favorable than 1st Source.

Dividends

1st Source pays an annual dividend of $1.72 per share and has a dividend yield of 2.1%. Wintrust Financial pays an annual dividend of $2.20 per share and has a dividend yield of 1.4%. 1st Source pays out 26.4% of its earnings in the form of a dividend. Wintrust Financial pays out 18.4% 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 and Wintrust Financial has raised its dividend for 12 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares 1st Source and Wintrust Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
1st Source	$600.00 million	3.24	$158.28 million	$6.52	12.39
Wintrust Financial	$4.23 billion	2.59	$823.84 million	$11.93	13.61

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

Insider and Institutional Ownership

74.5% of 1st Source shares are held by institutional investors. Comparatively, 93.5% of Wintrust Financial shares are held by institutional investors. 20.2% of 1st Source shares are held by insiders. Comparatively, 1.2% of Wintrust Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

1st Source has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500. Comparatively, Wintrust Financial has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Summary

Wintrust Financial beats 1st Source on 11 of the 17 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 Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance, and Wealth Management. The Community Banking segment offers non-interest bearing deposits, non-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.