Comparing Summit Financial Group (SMMF) and Horizon Bancorp (HBNC)

Summit Financial Group (NASDAQ: SMMF) and Horizon Bancorp (NASDAQ:HBNC) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, dividends, risk, institutional ownership and valuation.

Volatility and Risk

Summit Financial Group has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Horizon Bancorp has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Profitability

This table compares Summit Financial Group and Horizon Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Summit Financial Group 12.04% 11.88% 1.09%
Horizon Bancorp 20.49% 9.85% 1.08%

Institutional & Insider Ownership

22.8% of Summit Financial Group shares are owned by institutional investors. Comparatively, 44.7% of Horizon Bancorp shares are owned by institutional investors. 22.8% of Summit Financial Group shares are owned by insiders. Comparatively, 5.4% of Horizon Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Summit Financial Group and Horizon Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summit Financial Group 0 2 0 0 2.00
Horizon Bancorp 0 1 2 0 2.67

Summit Financial Group presently has a consensus price target of $26.50, indicating a potential upside of 3.92%. Horizon Bancorp has a consensus price target of $31.17, indicating a potential upside of 1.72%. Given Summit Financial Group’s higher probable upside, research analysts clearly believe Summit Financial Group is more favorable than Horizon Bancorp.

Valuation & Earnings

This table compares Summit Financial Group and Horizon Bancorp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Summit Financial Group $98.95 million 3.19 $11.91 million $0.95 26.84
Horizon Bancorp $161.62 million 4.84 $33.12 million $1.44 21.28

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

Dividends

Summit Financial Group pays an annual dividend of $0.44 per share and has a dividend yield of 1.7%. Horizon Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 1.7%. Summit Financial Group pays out 46.3% of its earnings in the form of a dividend. Horizon Bancorp pays out 36.1% 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.

Summary

Horizon Bancorp beats Summit Financial Group on 10 of the 16 factors compared between the two stocks.

Summit Financial Group Company Profile

Summit Financial Group, Inc. (Summit) is a financial holding company. The Company provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Shenandoah Valley, and Northern region of Virginia. The Company provides these services through its community bank subsidiary, Summit Community Bank (Summit Community or the Bank). The Company operates through two segments: community banking, and insurance & financial services. The community banking segment consists of its full service banks, which offer customers traditional banking products and services through various delivery channels. The insurance & financial services segment includes three insurance agency offices that sell insurance products. The Company also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia, which provides insurance brokerage services to individuals and businesses.

Horizon Bancorp Company Profile

Horizon Bancorp is a bank holding company. The Company provides a range of banking services in Northern and Central Indiana and Southwestern and Central Michigan through its bank subsidiary, Horizon Bank, N.A. (the Bank) and other affiliated entities and Horizon Risk Management, Inc. The Company operates through commercial banking segment. The Bank is a full-service commercial bank offering commercial and retail banking services, corporate and individual trust and agency services and other services incident to banking. Horizon Risk Management, Inc. is a captive insurance company. LSB Risk Management, Inc. is a captive insurance company. As of September 1, 2017, the Bank operated through 60 offices throughout northern and central Indiana and southern Michigan and Ohio. The Bank’s loan portfolio consists of commercial loans, real estate loans, mortgage warehouse loans and consumer loans.

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