Analyzing First Interstate BancSystem (NASDAQ:FIBK) and Veritex (NASDAQ:VBTX)

Veritex (NASDAQ:VBTX) and First Interstate BancSystem (NASDAQ:FIBK) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, earnings, valuation and risk.

Risk & Volatility

Veritex has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500. Comparatively, First Interstate BancSystem has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Institutional & Insider Ownership

88.3% of Veritex shares are held by institutional investors. Comparatively, 88.7% of First Interstate BancSystem shares are held by institutional investors. 4.6% of Veritex shares are held by company insiders. Comparatively, 6.9% of First Interstate BancSystem shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Veritex and First Interstate BancSystem’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Veritex	$429.84 million	2.68	$108.26 million	$1.72	12.26
First Interstate BancSystem	$1.43 billion	2.03	$257.50 million	$2.51	11.06

First Interstate BancSystem has higher revenue and earnings than Veritex. First Interstate BancSystem is trading at a lower price-to-earnings ratio than Veritex, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Veritex and First Interstate BancSystem, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Veritex	0	2	2	0	2.50
First Interstate BancSystem	0	3	2	0	2.40

Veritex presently has a consensus price target of $24.38, indicating a potential upside of 15.58%. First Interstate BancSystem has a consensus price target of $30.20, indicating a potential upside of 8.75%. Given Veritex’s stronger consensus rating and higher probable upside, equities analysts clearly believe Veritex is more favorable than First Interstate BancSystem.

Profitability

This table compares Veritex and First Interstate BancSystem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Veritex	12.47%	8.46%	1.03%
First Interstate BancSystem	17.76%	8.51%	0.88%

Dividends

Veritex pays an annual dividend of $0.80 per share and has a dividend yield of 3.8%. First Interstate BancSystem pays an annual dividend of $1.88 per share and has a dividend yield of 6.8%. Veritex pays out 46.5% of its earnings in the form of a dividend. First Interstate BancSystem pays out 74.9% 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. First Interstate BancSystem has increased its dividend for 11 consecutive years. First Interstate BancSystem is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

First Interstate BancSystem beats Veritex on 9 of the 16 factors compared between the two stocks.

About Veritex

Veritex Holdings, Inc. operates as the bank holding company for Veritex Community Bank that provides various commercial banking products and services to small and medium-sized businesses, and professionals. The company accepts deposit products include demand, savings, money market, and time accounts. Its loan products include commercial real estate and general commercial, mortgage warehouse loans, residential real estate, construction and land, farmland, paycheck protection program, 1-4 family residential, agricultural, multi-family residential, and consumer loans, as well as purchased receivables financing. The company also provides interest rate swap services; and a range of online banking solutions, such as access to account balances, online transfers, online bill payment and electronic delivery of customer statements, and ATMs, as well as mobile banking, mail, and personal appointment. In addition, it offers debit cards, night depository services, direct deposits, cashier's checks, and letters of credit; treasury management services, including balance reporting, transfers between accounts, wire transfer initiation, automated clearinghouse origination, and stop payments; and cash management deposit products and services consisting of lockbox, remote deposit capture, positive pay, reverse positive pay, account reconciliation services, zero balance accounts, and sweep accounts. The company operates full-service branches located in the Dallas-Fort Worth metroplex, and the Houston metropolitan area. Veritex Holdings, Inc. was incorporated in 2009 and is headquartered in Dallas, Texas.

About First Interstate BancSystem

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States. It offers various traditional depository products, including checking, savings, and time deposits; and repurchase agreements primarily for commercial and municipal depositors. The company also offers real estate loans comprising commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans comprising direct personal loans, credit card loans and lines of credit, and indirect loans; variable and fixed rate commercial loans for small and medium-sized manufacturing, wholesale, retail, and service businesses for working capital needs and business expansions; and agricultural loans. In addition, it provides a range of trust, employee benefit, investment management, insurance, agency, and custodial services to individuals, businesses, and nonprofit organizations. Further, the company offers marketing, credit review, loan servicing, credit cards issuance and servicing, mortgage loan sales and servicing, indirect consumer loan purchasing and processing, loan collection services, other operational, and specialized staff support services, as well as online and mobile banking services. The company serves individuals, businesses, municipalities, and other entities in various industries, including agriculture, construction, education, governmental services, healthcare, hospitality, housing, professional services, real estate development, retail, technology, tourism, and wholesale trade. First Interstate BancSystem, Inc. was incorporated in 1971 and is headquartered in Billings, Montana.