Critical Comparison: Enterprise Financial Services (NASDAQ:EFSC) and Chemung Financial (NASDAQ:CHMG)

Chemung Financial (NASDAQ:CHMG) and Enterprise Financial Services (NASDAQ:EFSC) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Dividends

Chemung Financial pays an annual dividend of $1.44 per share and has a dividend yield of 1.7%. Enterprise Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.3%. Chemung Financial pays out 20.7% of its earnings in the form of a dividend. Enterprise Financial Services pays out 27.8% 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. Chemung Financial has raised its dividend for 1 consecutive years and Enterprise Financial Services has raised its dividend for 11 consecutive years. Enterprise Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for Chemung Financial and Enterprise Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chemung Financial	0	1	2	1	3.00
Enterprise Financial Services	0	2	4	0	2.67

Chemung Financial presently has a consensus target price of $84.00, indicating a potential upside of 1.24%. Enterprise Financial Services has a consensus target price of $70.00, indicating a potential upside of 13.64%. Given Enterprise Financial Services’ higher probable upside, analysts clearly believe Enterprise Financial Services is more favorable than Chemung Financial.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chemung Financial	$140.78 million	2.84	$15.10 million	$6.96	11.92
Enterprise Financial Services	$1.00 billion	2.23	$201.37 million	$5.03	12.25

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

Insider and Institutional Ownership

47.5% of Chemung Financial shares are owned by institutional investors. Comparatively, 72.2% of Enterprise Financial Services shares are owned by institutional investors. 12.7% of Chemung Financial shares are owned by company insiders. Comparatively, 2.2% of Enterprise Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Chemung Financial	20.68%	12.98%	1.22%
Enterprise Financial Services	18.72%	9.70%	1.11%

Volatility & Risk

Chemung Financial has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Enterprise Financial Services has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500.

About Chemung Financial

Chemung Financial Corporation operates as a bank holding company for Chemung Canal Trust Company that provides a range of banking, financing, fiduciary, and other financial services. The company provides demand, savings, and time deposits; non-interest and interest-bearing checking accounts; and insured money market accounts. It also offers commercial and agricultural loans comprising loans to small to mid-sized businesses; commercial and residential mortgage loans; and consumer loans, including home equity lines of credit and home equity term loans. In addition, the company provides interest rate swaps, letters of credit, employee benefit plans, insurance products, mutual fund, brokerage, and tax preparation services. Further, it offers guardian, custodian, trustee, investment, pension, estate planning, and employee benefit administrative services, as well as acts as an agent for pension, profit-sharing, and other employee benefit trusts. Chemung Financial Corporation was founded in 1833 and is headquartered in Elmira, New York.

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.