Chemung Financial (NASDAQ:CHMG) & Independent Bank (NASDAQ:IBCP) Critical Analysis

Chemung Financial (NASDAQ:CHMG) and Independent Bank (NASDAQ:IBCP) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Insider and Institutional Ownership

47.5% of Chemung Financial shares are held by institutional investors. Comparatively, 79.4% of Independent Bank shares are held by institutional investors. 12.7% of Chemung Financial shares are held by company insiders. Comparatively, 5.9% of Independent Bank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Chemung Financial and Independent Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chemung Financial	23.36%	14.49%	1.38%
Independent Bank	21.63%	14.14%	1.30%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Chemung Financial and Independent Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chemung Financial	0	2	4	1	2.86
Independent Bank	0	2	3	0	2.60

Chemung Financial presently has a consensus price target of $88.75, suggesting a potential upside of 4.28%. Independent Bank has a consensus price target of $41.00, suggesting a potential upside of 11.59%. Given Independent Bank’s higher possible upside, analysts clearly believe Independent Bank is more favorable than Chemung Financial.

Earnings & Valuation

This table compares Chemung Financial and Independent Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chemung Financial	$122.18 million	3.36	$15.10 million	$7.97	10.68
Independent Bank	$315.38 million	2.57	$68.54 million	$3.40	10.81

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

Dividends

Chemung Financial pays an annual dividend of $1.44 per share and has a dividend yield of 1.7%. Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.0%. Chemung Financial pays out 18.1% of its earnings in the form of a dividend. Independent Bank pays out 32.9% 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. Chemung Financial has increased its dividend for 1 consecutive years and Independent Bank has increased its dividend for 11 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Chemung Financial has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Independent Bank has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.

Summary

Chemung Financial beats Independent Bank on 10 of the 18 factors compared between the two stocks.

About Chemung Financial

Chemung Financial Corporation is a bank holding company headquartered in Elmira, New York. Its principal subsidiary, Chemung Canal Trust Company, provides personal and business banking services through branches in New York and northern Pennsylvania. The bank offers deposit accounts, loans, mortgages, and other lending services. Through its wealth management and financial services businesses, it also provides trust, investment management, financial planning, and insurance services. Founded in 1833, Chemung Canal Trust Company has a long history of serving communities in the region.

About Independent Bank

Independent Bank Corporation is a bank holding company that provides financial services through its subsidiary, Independent Bank. The company serves individuals, families and businesses, primarily in Michigan. Its offerings include personal and business checking and savings accounts, consumer and commercial lending, mortgage services, and digital banking. Business customers can also access services such as cash management and other treasury solutions. Independent Bank operates as a community-focused bank, combining branch-based service with online and mobile banking.