Critical Contrast: City (NASDAQ:CHCO) & Madison County Financial (OTCMKTS:MCBK)

City (NASDAQ:CHCO) and Madison County Financial (OTCMKTS:MCBK) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares City and Madison County Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$398.98 million	4.29	$130.49 million	$9.08	13.37
Madison County Financial	$32.34 million	2.51	$6.50 million	N/A	N/A

City has higher revenue and earnings than Madison County Financial.

Risk and Volatility

City has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Madison County Financial has a beta of 0.09, meaning that its share price is 91% less volatile than the S&P 500.

Institutional & Insider Ownership

72.4% of City shares are owned by institutional investors. 1.8% of City shares are owned by company insiders. Comparatively, 16.9% of Madison County Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares City and Madison County Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City	32.72%	16.58%	1.96%
Madison County Financial	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of current ratings and target prices for City and Madison County Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	5	1	0	2.17
Madison County Financial	0	0	0	0	0.00

City presently has a consensus price target of $134.25, indicating a potential upside of 10.57%. Given City’s stronger consensus rating and higher possible upside, equities research analysts clearly believe City is more favorable than Madison County Financial.

Dividends

City pays an annual dividend of $3.48 per share and has a dividend yield of 2.9%. Madison County Financial pays an annual dividend of $0.61 per share and has a dividend yield of 2.0%. City pays out 38.3% of its earnings in the form of a dividend. City has raised its dividend for 6 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

City beats Madison County Financial on 13 of the 15 factors compared between the two stocks.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

About Madison County Financial

Madison County Financial, Inc. operates as the holding company for Madison County Bank that provides banking and financial services to individual and corporate customers in Nebraska, the United States. It offers checking, money market savings, savings, and individual retirement accounts; certificates of deposit; credit and debit cards; home loans; and consumer loans, including home equity lines of credit, second mortgage, home improvement, recreational vehicle, personal, and overdraft protection loans, as well as loans for automobiles, trucks, and vans. The company also provides agricultural real estate, machinery and equipment, livestock and crop, and operating loans; and commercial real estate, construction, investment property, and working capital loans, as well as equipment financing services. In addition, it offers online and mobile banking, and merchant services. The company was formerly known as Madison County Holding Company and changed its name to Madison County Financial, Inc. in October 2012. Madison County Financial, Inc. was founded in 1888 and is headquartered in Madison, Nebraska.