Analyzing 1st Source (NASDAQ:SRCE) and Wintrust Financial (NASDAQ:WTFC)

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

Earnings and Valuation

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

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

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 & Institutional Ownership

93.5% of Wintrust Financial shares are owned by institutional investors. Comparatively, 74.5% of 1st Source shares are owned by institutional investors. 1.2% of Wintrust Financial shares are owned by company insiders. Comparatively, 20.2% of 1st Source shares are owned by company 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.

Analyst Ratings

This is a breakdown of current ratings for Wintrust Financial and 1st Source, as provided by MarketBeat.com.

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

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

Dividends

Wintrust Financial pays an annual dividend of $2.20 per share and has a dividend yield of 1.4%. 1st Source pays an annual dividend of $1.72 per share and has a dividend yield of 2.1%. Wintrust Financial pays out 18.4% of its earnings in the form of a dividend. 1st Source pays out 26.4% 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. Wintrust Financial has raised its dividend for 12 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.

Volatility & Risk

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

Profitability

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

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

Summary

Wintrust Financial beats 1st Source on 11 of the 17 factors compared between the two stocks.

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.

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.