Contrasting Security Federal (OTCMKTS:SFDL) and First Busey (NASDAQ:BUSE)

Security Federal (OTCMKTS:SFDL) and First Busey (NASDAQ:BUSE) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.

Profitability

This table compares Security Federal and First Busey’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Security Federal	11.20%	10.26%	0.63%
First Busey	17.14%	8.94%	1.00%

Analyst Ratings

This is a breakdown of current ratings for Security Federal and First Busey, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Security Federal	0	0	0	0	0.00
First Busey	0	2	2	0	2.50

First Busey has a consensus price target of $28.75, suggesting a potential upside of 15.81%. Given First Busey’s stronger consensus rating and higher possible upside, analysts clearly believe First Busey is more favorable than Security Federal.

Dividends

Security Federal pays an annual dividend of $0.56 per share and has a dividend yield of 1.9%. First Busey pays an annual dividend of $1.00 per share and has a dividend yield of 4.0%. Security Federal pays out 20.3% of its earnings in the form of a dividend. First Busey pays out 50.8% 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.

Risk & Volatility

Security Federal has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, First Busey has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Earnings and Valuation

This table compares Security Federal and First Busey”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Security Federal	$87.55 million	1.09	$9.81 million	$2.76	10.88
First Busey	$663.36 million	2.13	$113.69 million	$1.97	12.60

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

Insider & Institutional Ownership

56.5% of First Busey shares are owned by institutional investors. 35.9% of Security Federal shares are owned by company insiders. Comparatively, 7.1% of First Busey shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

First Busey beats Security Federal on 12 of the 16 factors compared between the two stocks.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.

About First Busey

First Busey Corporation operates as the bank holding company for Busey Bank that engages in the provision of retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. It operates through three segments: Banking, Wealth Management, and FirsTech. The Banking segment provides banking services to individual customers, such as demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as loan products, including residential real estate, home equity lines of credit, and consumer loans. This segment also offers banking services to corporate customers, including commercial, commercial real estate, real estate construction, and agricultural loans, as well as cash management services. The Wealth Management segment offers a range of investment and asset management, investment, brokerage, investment strategy consulting, fiduciary, philanthropic advisory, tax preparation, business succession planning, and employee retirement plan services to individuals, businesses, and foundations; and professional farm management services to the agricultural industry. The FirsTech segment provides payment technology solutions comprising online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments, as well as tools to help clients with billing, reconciliation, bill reminders, and treasury services. The company was founded in 1868 and is headquartered in Champaign, Illinois.