Contrasting 1st Source (NASDAQ:SRCE) & Univest Financial (NASDAQ:UVSP)

Univest Financial (NASDAQ:UVSP) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Analyst Ratings

This is a summary of current ratings and price targets for Univest Financial and 1st Source, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Univest Financial	0	2	0	0	2.00
1st Source	0	2	0	0	2.00

Univest Financial presently has a consensus target price of $26.50, suggesting a potential downside of 2.14%. 1st Source has a consensus target price of $64.75, suggesting a potential upside of 11.39%. Given 1st Source’s higher possible upside, analysts clearly believe 1st Source is more favorable than Univest Financial.

Profitability

This table compares Univest Financial and 1st Source’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Univest Financial	14.91%	8.23%	0.88%
1st Source	23.23%	12.02%	1.47%

Dividends

Univest Financial pays an annual dividend of $0.84 per share and has a dividend yield of 3.1%. 1st Source pays an annual dividend of $1.44 per share and has a dividend yield of 2.5%. Univest Financial pays out 35.1% of its earnings in the form of a dividend. 1st Source pays out 29.0% 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. 1st Source has raised its dividend for 37 consecutive years.

Volatility and Risk

Univest Financial has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500.

Earnings and Valuation

This table compares Univest Financial and 1st Source”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Univest Financial	$448.55 million	1.76	$71.10 million	$2.39	11.33
1st Source	$507.53 million	2.81	$124.93 million	$4.97	11.70

1st Source has higher revenue and earnings than Univest Financial. Univest Financial is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

75.1% of Univest Financial shares are held by institutional investors. Comparatively, 74.5% of 1st Source shares are held by institutional investors. 2.1% of Univest Financial shares are held by company insiders. Comparatively, 19.3% of 1st Source 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.

Summary

1st Source beats Univest Financial on 12 of the 15 factors compared between the two stocks.

About Univest Financial

Univest Financial Corporation operates as the bank holding company for Univest Bank and Trust Co. that provides banking products and services primarily in the United States. It operates through three segments: Banking, Wealth Management, and Insurance. The Banking segment offers a range of banking services, such as deposit taking, loan origination and servicing, mortgage banking, other general banking, and equipment lease financing services for individuals, businesses, municipalities, and nonprofit organizations. Its Wealth Management segment provides investment advisory, financial planning, and trust and brokerage services for private families and individuals, municipal pension plans, retirement plans, and trusts and guardianships. The Insurance segment offers commercial property and casualty insurance, employee benefits solutions, personal insurance lines, and human resources consulting services. The company was formerly known as Univest Corporation of Pennsylvania and changed its name to Univest Financial Corporation in January 2019. The company was founded in 1876 and is headquartered in Souderton, Pennsylvania.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.