Citizens (NASDAQ:CIZN) & German American Bancorp (NASDAQ:GABC) Critical Analysis

German American Bancorp (NASDAQ:GABC) and Citizens (NASDAQ:CIZN) are both small-cap 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.

Volatility & Risk

German American Bancorp has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, Citizens has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Profitability

This table compares German American Bancorp and Citizens’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
German American Bancorp	28.78%	12.41%	1.74%
Citizens	7.00%	11.28%	0.37%

Dividends

German American Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.5%. Citizens pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. German American Bancorp pays out 32.0% of its earnings in the form of a dividend. Citizens pays out 4.0% 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. German American Bancorp has raised its dividend for 13 consecutive years and Citizens has raised its dividend for 1 consecutive years. German American Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent recommendations for German American Bancorp and Citizens, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
German American Bancorp	0	2	2	2	3.00
Citizens	0	1	5	0	2.83

German American Bancorp currently has a consensus price target of $53.33, suggesting a potential upside of 6.89%. Citizens has a consensus price target of $16.83, suggesting a potential upside of 70.90%. Given Citizens’ higher probable upside, analysts plainly believe Citizens is more favorable than German American Bancorp.

Insider and Institutional Ownership

46.9% of German American Bancorp shares are held by institutional investors. Comparatively, 9.7% of Citizens shares are held by institutional investors. 3.2% of German American Bancorp shares are held by insiders. Comparatively, 8.9% of Citizens 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 and Valuation

This table compares German American Bancorp and Citizens”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
German American Bancorp	$487.40 million	3.85	$112.64 million	$3.88	12.86
Citizens	$40.95 million	1.37	$5.49 million	$2.02	4.88

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

Summary

German American Bancorp beats Citizens on 14 of the 18 factors compared between the two stocks.

About German American Bancorp

German American Bancorp, Inc. is a bank holding company headquartered in Jasper, Indiana. Through its subsidiary, German American Bank, it provides commercial and consumer banking services to individuals, businesses and organizations. The company offers deposit accounts, commercial and personal loans, mortgage lending, and related banking services. Its other operations include wealth management and trust services, as well as insurance products through German American Insurance. German American serves communities across southern Indiana and parts of Kentucky.

About Citizens

Citizens Holding Company was a bank holding company for Citizens Bank, a community banking institution headquartered in Philadelphia, Mississippi. The bank served individuals, businesses and public-sector customers through traditional banking products and services. Its offerings included checking and savings accounts, certificates of deposit, consumer and residential mortgage loans, commercial and agricultural lending, online banking and other deposit and credit services. Citizens Bank operated primarily in Mississippi, with a branch network focused on communities in the state’s east-central region.