Comparing Old Second Bancorp (OSBC) & Carolina Financial (CARO)

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

Earnings & Valuation

This table compares Old Second Bancorp and Carolina Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Old Second Bancorp $117.88 million 3.85 $15.13 million $0.81 18.83
Carolina Financial $129.00 million 7.35 $28.56 million $2.04 20.56

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

Profitability

This table compares Old Second Bancorp and Carolina Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Old Second Bancorp 16.58% 14.42% 1.20%
Carolina Financial 19.50% 12.04% 1.60%

Institutional and Insider Ownership

69.6% of Old Second Bancorp shares are held by institutional investors. Comparatively, 49.5% of Carolina Financial shares are held by institutional investors. 3.3% of Old Second Bancorp shares are held by insiders. Comparatively, 7.8% of Carolina Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Old Second Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Carolina Financial pays an annual dividend of $0.24 per share and has a dividend yield of 0.6%. Old Second Bancorp pays out 4.9% of its earnings in the form of a dividend. Carolina Financial pays out 11.8% 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. Carolina Financial has raised its dividend for 3 consecutive years. Carolina Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Old Second Bancorp has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Carolina Financial has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Old Second Bancorp and Carolina Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Old Second Bancorp 0 1 2 0 2.67
Carolina Financial 0 2 3 0 2.60

Old Second Bancorp currently has a consensus price target of $14.17, suggesting a potential downside of 7.10%. Carolina Financial has a consensus price target of $38.80, suggesting a potential downside of 7.51%. Given Old Second Bancorp’s stronger consensus rating and higher possible upside, research analysts plainly believe Old Second Bancorp is more favorable than Carolina Financial.

Summary

Carolina Financial beats Old Second Bancorp on 11 of the 17 factors compared between the two stocks.

About Old Second Bancorp

Old Second Bancorp, Inc. operates as a bank holding company for Old Second National Bank that provides a range of banking services. The company accepts demand, NOW, money market, savings, time deposit, individual retirement, and checking accounts, as well as certificate of deposit accounts. It also offers revolving lines of credit for working capital; lending for capital expenditures on manufacturing equipment; lending to small business manufactures, service companies, medical and dental entities, and specialty contractors; commercial real estate loans; construction loans; residential real estate loans, such as residential first mortgage loans, second mortgage loans, and home equity line of credit mortgages; consumer loans, including motor vehicle, home improvement, and signature loans; installment and agricultural loans, as well as student loans; and overdraft checking. In addition, the company provides safe deposit services; trust services; wealth management services; and money orders, cashier's checks, foreign currency, direct deposits, discount brokerage, debit and credit cards, and other services, as well as acquires the U.S. treasury notes and bonds. Further, it offers online and mobile banking; corporate cash management products, including remote and mobile deposits capture, investment sweep accounts, zero balance accounts, automated tax payments, automatic teller machines access, telephone banking, lockbox accounts, automated clearing house transactions, account reconciliation, controlled disbursement, detail and general information reporting, wire transfers, and vault services for currency and coin; and investment, agency, and custodial services for individual, corporate, and not-for-profit clients. The company provides its financial services through its 25 banking locations located in Kane, Kendall, DeKalb, DuPage, LaSalle, Will, and Cook counties in Illinois. Old Second Bancorp, Inc. was founded in 1982 and is headquartered in Aurora, Illinois.

About Carolina Financial

Carolina Financial Corporation operates as a holding company for CresCom Bank that provides a range of commercial and retail banking financial services in South Carolina and North Carolina. The company operates through three segments: Community Banking, Wholesale Mortgage Banking, and Other. It offers checking accounts, commercial accounts, savings accounts, money market accounts, retirement accounts, longer-term certificates of deposit, noninterest-bearing demand accounts, and interest-bearing demand accounts to individuals, businesses, associations, organizations, and governmental authorities. The company also provides commercial and residential real estate mortgage loans, real estate construction loans, commercial and industrial loans, commercial leases, and consumer loans to individuals, small to medium-sized businesses, and professional firms. In addition, it offers mortgage banking services comprising correspondent lending and loan servicing. The company operates through a network of 62 full service branches and 2 loan production offices located in South and North Carolina. Carolina Financial Corporation was incorporated in 1996 and is based in Charleston, South Carolina.

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