Critical Comparison: Northern Trust (NASDAQ:NTRS) & ChoiceOne Financial Services (NASDAQ:COFS)

ChoiceOne Financial Services (NASDAQ:COFS) and Northern Trust (NASDAQ:NTRS) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, valuation, earnings and profitability.

Dividends

ChoiceOne Financial Services pays an annual dividend of $1.12 per share and has a dividend yield of 3.2%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 3.0%. ChoiceOne Financial Services pays out 35.3% of its earnings in the form of a dividend. Northern Trust pays out 37.3% 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 raised its dividend for 13 consecutive years. ChoiceOne Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

19.9% of ChoiceOne Financial Services shares are held by institutional investors. Comparatively, 83.2% of Northern Trust shares are held by institutional investors. 7.9% of ChoiceOne Financial Services shares are held by company insiders. Comparatively, 0.6% of Northern Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for ChoiceOne Financial Services and Northern Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ChoiceOne Financial Services	0	0	1	0	3.00
Northern Trust	2	7	3	0	2.08

ChoiceOne Financial Services presently has a consensus target price of $37.00, suggesting a potential upside of 6.84%. Northern Trust has a consensus target price of $105.00, suggesting a potential upside of 4.85%. Given ChoiceOne Financial Services’ stronger consensus rating and higher probable upside, research analysts plainly believe ChoiceOne Financial Services is more favorable than Northern Trust.

Profitability

This table compares ChoiceOne Financial Services and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ChoiceOne Financial Services	18.41%	11.79%	0.96%
Northern Trust	10.92%	12.75%	0.94%

Risk and Volatility

ChoiceOne Financial Services has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Valuation & Earnings

This table compares ChoiceOne Financial Services and Northern Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ChoiceOne Financial Services	$88.70 million	3.50	$21.26 million	$3.17	10.92
Northern Trust	$7.88 billion	2.52	$1.11 billion	$8.04	12.46

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

Summary

ChoiceOne Financial Services beats Northern Trust on 9 of the 17 factors compared between the two stocks.

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.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.