Contrasting 1st Source (NASDAQ:SRCE) & First Capital (NASDAQ:FCAP)

First Capital (NASDAQ:FCAP) and 1st Source (NASDAQ:SRCE) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, earnings, risk, valuation and institutional ownership.

Insider and Institutional Ownership

11.7% of First Capital shares are held by institutional investors. Comparatively, 74.5% of 1st Source shares are held by institutional investors. 4.1% of First Capital shares are held by insiders. Comparatively, 20.2% of 1st Source shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares First Capital and 1st Source”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Capital	$65.31 million	3.29	$16.37 million	$5.72	11.26
1st Source	$600.00 million	3.58	$158.28 million	$7.41	12.04

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

Analyst Recommendations

This is a summary of recent recommendations for First Capital and 1st Source, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Capital	0	0	2	0	3.00
1st Source	0	3	1	1	2.60

1st Source has a consensus price target of $91.67, suggesting a potential upside of 2.75%. Given 1st Source’s higher probable upside, analysts plainly believe 1st Source is more favorable than First Capital.

Volatility & Risk

First Capital has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Dividends

First Capital pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. 1st Source pays an annual dividend of $1.80 per share and has a dividend yield of 2.0%. First Capital pays out 22.4% of its earnings in the form of a dividend. 1st Source pays out 24.3% 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 Capital has raised its dividend for 2 consecutive years and 1st Source has raised its dividend for 38 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Capital	27.14%	13.67%	1.49%
1st Source	28.85%	13.57%	1.97%

Summary

1st Source beats First Capital on 13 of the 18 factors compared between the two stocks.

About First Capital

First Capital, Inc. operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers. The company offers various deposit instruments, including non-interest-bearing checking accounts, negotiable order of withdrawal accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plans. It also provides residential mortgage loans, construction loans for residential and commercial properties, and commercial real estate loans, as well as commercial business loans. In addition, the company originates mortgage loans for sale in the secondary market and sells non-deposit investment products; and offers various secured or guaranteed consumer loans comprising automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans, credit cards and other personal loans, and loans secured by savings deposits, as well as unsecured consumer loans. First Capital, Inc. was founded in 1891 and is based in Corydon, Indiana.

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.