Reviewing Independent Bank Group (NASDAQ:IBTX) & S&T Bancorp (NASDAQ:STBA)

Independent Bank Group (NASDAQ:IBTX) and S&T Bancorp (NASDAQ:STBA) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Dividends

Independent Bank Group pays an annual dividend of $1.52 per share and has a dividend yield of 2.6%. S&T Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 2.9%. Independent Bank Group pays out 60.1% of its earnings in the form of a dividend. S&T Bancorp pays out 37.4% 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. S&T Bancorp has raised its dividend for 11 consecutive years. S&T Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Independent Bank Group and S&T Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank Group	-43.02%	4.83%	0.58%
S&T Bancorp	24.20%	10.63%	1.43%

Risk and Volatility

Independent Bank Group has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Independent Bank Group and S&T Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank Group	0	2	4	0	2.67
S&T Bancorp	0	1	0	0	2.00

Independent Bank Group currently has a consensus target price of $53.83, indicating a potential downside of 9.66%. S&T Bancorp has a consensus target price of $41.00, indicating a potential downside of 10.11%. Given Independent Bank Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Independent Bank Group is more favorable than S&T Bancorp.

Institutional and Insider Ownership

77.9% of Independent Bank Group shares are held by institutional investors. Comparatively, 65.2% of S&T Bancorp shares are held by institutional investors. 3.5% of Independent Bank Group shares are held by insiders. Comparatively, 1.4% of S&T Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Independent Bank Group and S&T Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank Group	$922.84 million	2.67	$43.20 million	$2.53	23.55
S&T Bancorp	$395.94 million	4.40	$144.78 million	$3.53	12.92

S&T Bancorp has lower revenue, but higher earnings than Independent Bank Group. S&T Bancorp is trading at a lower price-to-earnings ratio than Independent Bank Group, indicating that it is currently the more affordable of the two stocks.

Summary

S&T Bancorp beats Independent Bank Group on 9 of the 17 factors compared between the two stocks.

About Independent Bank Group

Independent Bank Group, Inc., through its subsidiary, Independent Bank provides various commercial banking products and services to businesses, professionals, and individuals in the United States. It accepts various deposit products, including checking and savings accounts, demand deposits, money market accounts, and certificates of deposit. The company also provides commercial real estate loans; commercial construction, land, and land development loans; residential real estate loans; single-family interim construction loans; commercial loans, such as SBA guaranteed loans, business term loans, lines of credit, and energy related loans; agricultural loans for farmers and ranchers; consumer installment loans comprising loans to purchase cars, boats, and other recreational vehicles; and residential mortgages, as well as mortgage warehouse purchase loans. In addition, it offers debit and credit cards, online and mobile banking, estatement, bank-by-mail, and direct deposit services; wealth management services; and business accounts and management services consisting of analyzed business checking, business savings, and treasury management services. The company was incorporated in 2002 and is headquartered in McKinney, Texas.

About S&T Bancorp

S&T Bancorp, Inc. operates as the bank holding company for S&T Bank that engages in the provision of retail and commercial banking products and services. The company operates through six segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The company accepts time and demand deposits; and offers commercial and consumer loans, cash management services, and brokerage and trust services, as well as acts as guardian and custodian of employee benefits. It also manages private investment accounts for individuals and institutions. In addition, the company distributes life insurance and long-term disability income insurance products, as well as offers title insurance agency services to commercial customers; and acts as a reinsurer of credit life, accident, and health insurance policies. S&T Bancorp, Inc. was founded in 1902 and is headquartered in Indiana, Pennsylvania.