Lakeland Financial (LKFN) & Southside Bancshares (SBSI) Critical Contrast

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Lakeland Financial (NASDAQ: SBSI) and Southside Bancshares (NASDAQ:SBSI) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Earnings & Valuation

This table compares Lakeland Financial and Southside Bancshares’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lakeland Financial $201.71 million 6.27 $57.33 million $2.39 20.91
Southside Bancshares $224.95 million 5.56 $54.31 million $1.89 18.85

Lakeland Financial has higher earnings, but lower revenue than Southside Bancshares. Southside Bancshares is trading at a lower price-to-earnings ratio than Lakeland Financial, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

72.3% of Lakeland Financial shares are owned by institutional investors. Comparatively, 46.5% of Southside Bancshares shares are owned by institutional investors. 4.4% of Lakeland Financial shares are owned by company insiders. Comparatively, 6.1% of Southside Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Lakeland Financial and Southside Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lakeland Financial 29.95% 14.83% 1.51%
Southside Bancshares 24.55% 9.07% 1.04%

Risk & Volatility

Lakeland Financial has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500. Comparatively, Southside Bancshares has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Lakeland Financial and Southside Bancshares, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lakeland Financial 0 2 0 0 2.00
Southside Bancshares 0 2 0 0 2.00

Lakeland Financial presently has a consensus target price of $51.00, suggesting a potential upside of 2.04%. Southside Bancshares has a consensus target price of $37.00, suggesting a potential upside of 3.85%. Given Southside Bancshares’ higher possible upside, analysts plainly believe Southside Bancshares is more favorable than Lakeland Financial.

Dividends

Lakeland Financial pays an annual dividend of $0.40 per share and has a dividend yield of 0.8%. Southside Bancshares pays an annual dividend of $1.20 per share and has a dividend yield of 3.4%. Lakeland Financial pays out 16.7% of its earnings in the form of a dividend. Southside Bancshares pays out 63.5% 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. Lakeland Financial has raised its dividend for 6 consecutive years and Southside Bancshares has raised its dividend for 20 consecutive years. Southside Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Lakeland Financial beats Southside Bancshares on 10 of the 15 factors compared between the two stocks.

About Lakeland Financial

Lakeland Financial Corporation operates as the bank holding company for Lake City Bank that provides various banking products and services in Indiana. The company offers various deposit products, including noninterest bearing deposits; interest-bearing checking, savings, and money market deposits; and NOW and demand deposits. It also provides commercial and industrial loans, commercial real estate and multi-family residential loans, agri-business and agricultural loans, consumer 1-4 family mortgage loans, and other consumer loans. In addition, the company offers corporate treasury management, wealth advisory, and trust services; retail brokerage services, including various financial and investment products, such as annuities and life insurance; retail and merchant credit card services; and Internet business banking and online treasury management services. It serves commercial real estate, manufacturing, agriculture, construction, retail, wholesale, finance and insurance, accommodation and food services, and health care industries. As of December 31, 2017, the company operated through 49 branch offices in Northern and Central Indiana. Lakeland Financial Corporation was founded in 1872 and is headquartered in Warsaw, Indiana.

About Southside Bancshares

Southside Bancshares, Inc. operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations. Its deposit products include savings, money market, and interest and noninterest bearing checking accounts, as well as certificates of deposit. The company's loan portfolio comprises consumer loans that include 1-4 family residential loans, home equity loans, home improvement loans, automobile loans, and other installment loans; commercial loans, such as short-term working capital loans for inventory and accounts receivable, short and medium-term loans for equipment or other business capital expansion, commercial real estate loans, and municipal loans; and construction loans for 1-4 family residential and commercial real estate. It also offers trust services consisting of investment management, administration, and advisory services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. The company operates through 60 branches and 40 motor bank facilities located in Tyler, Longview, Lindale, Gresham, Jacksonville, Bullard, Chandler, Hawkins, Palestine, Gun Barrel City, Whitehouse, Fort Worth, Arlington, Cleburne, Euless, Flower Mound, Frisco, Granbury, Grapevine, Irving, Watauga, Weatherford, Austin, Diboll, Lufkin, Nacogdoches, Cleveland, Splendora, Jasper, Pineland, Hemphill, and San Augustine; and a network of approximately 84 automated teller machines, as well as trust services, and/or loan production or other financial services offices. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.

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