Comparing South Plains Financial (NASDAQ:SPFI) & ChoiceOne Financial Services (NASDAQ:COFS)

South Plains Financial (NASDAQ:SPFI) and ChoiceOne Financial Services (NASDAQ:COFS) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for South Plains Financial and ChoiceOne Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Plains Financial	0	0	2	0	3.00
ChoiceOne Financial Services	0	1	0	0	2.00

South Plains Financial currently has a consensus target price of $31.00, suggesting a potential upside of 11.95%. ChoiceOne Financial Services has a consensus target price of $24.00, suggesting a potential downside of 16.38%. Given South Plains Financial’s stronger consensus rating and higher possible upside, equities research analysts plainly believe South Plains Financial is more favorable than ChoiceOne Financial Services.

Dividends

South Plains Financial pays an annual dividend of $0.56 per share and has a dividend yield of 2.0%. ChoiceOne Financial Services pays an annual dividend of $1.08 per share and has a dividend yield of 3.8%. South Plains Financial pays out 15.0% of its earnings in the form of a dividend. ChoiceOne Financial Services pays out 38.4% 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. ChoiceOne Financial Services has increased its dividend for 12 consecutive years. ChoiceOne Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares South Plains Financial and ChoiceOne Financial Services’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Plains Financial	$291.26 million	1.56	$62.74 million	$3.74	7.40
ChoiceOne Financial Services	$113.89 million	1.91	$21.26 million	$2.81	10.21

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

Profitability

This table compares South Plains Financial and ChoiceOne Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Plains Financial	21.23%	11.19%	1.05%
ChoiceOne Financial Services	17.53%	11.15%	0.83%

Risk and Volatility

South Plains Financial has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500. Comparatively, ChoiceOne Financial Services has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500.

Institutional and Insider Ownership

55.0% of South Plains Financial shares are owned by institutional investors. Comparatively, 19.9% of ChoiceOne Financial Services shares are owned by institutional investors. 25.4% of South Plains Financial shares are owned by company insiders. Comparatively, 7.9% of ChoiceOne Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

South Plains Financial beats ChoiceOne Financial Services on 12 of the 17 factors compared between the two stocks.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, Texas.

About ChoiceOne Financial Services

ChoiceOne Financial Services, Inc. operates as the bank holding company for ChoiceOne Bank that provides banking services to corporations, partnerships, and individuals in Michigan. The company offers various deposit products, including time, savings, and demand deposits, safe deposit, and automated transaction machine services. It also provides commercial lending products, such as business, industry, agricultural, construction, inventory, and real estate loans; and consumer loans comprising direct and indirect loans to consumers and purchasers of residential and real properties. In addition, the company offers alternative investment products, which include annuities and mutual funds; and sells insurance policies, such as life and health for commercial and consumer clients. Further, it provides trust and wealth management services. ChoiceOne Financial Services, Inc. was founded in 1898 and is headquartered in Sparta, Michigan.