Analyzing State Street (NYSE:STT) & German American Bancorp (NASDAQ:GABC)

State Street (NYSE:STT) and German American Bancorp (NASDAQ:GABC) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, dividends, valuation, risk, institutional ownership, analyst recommendations and earnings.

Dividends

State Street pays an annual dividend of $3.04 per share and has a dividend yield of 3.7%. German American Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 3.3%. State Street pays out 34.1% of its earnings in the form of a dividend. German American Bancorp pays out 41.1% 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. State Street has increased its dividend for 13 consecutive years and German American Bancorp has increased its dividend for 13 consecutive years. State Street is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

87.4% of State Street shares are held by institutional investors. Comparatively, 46.9% of German American Bancorp shares are held by institutional investors. 0.3% of State Street shares are held by company insiders. Comparatively, 6.2% of German American Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

State Street has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, German American Bancorp has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Profitability

This table compares State Street and German American Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
State Street	12.14%	12.60%	0.83%
German American Bancorp	23.69%	12.04%	1.35%

Valuation & Earnings

This table compares State Street and German American Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
State Street	$13.07 billion	1.80	$2.69 billion	$8.91	9.13
German American Bancorp	$214.93 million	6.20	$83.81 million	$2.82	12.63

State Street has higher revenue and earnings than German American Bancorp. State Street is trading at a lower price-to-earnings ratio than German American Bancorp, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for State Street and German American Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
State Street	1	6	6	0	2.38
German American Bancorp	0	2	3	0	2.60

State Street presently has a consensus price target of $103.54, suggesting a potential upside of 27.21%. German American Bancorp has a consensus price target of $46.40, suggesting a potential upside of 30.26%. Given German American Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe German American Bancorp is more favorable than State Street.

Summary

State Street beats German American Bancorp on 9 of the 16 factors compared between the two stocks.

About State Street

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody, accounting, regulatory reporting, investor, and performance and analytics; middle office products, such as IBOR, transaction management, loans, cash, derivatives and collateral, record keeping, and client reporting and investment analytics; finance leasing; foreign exchange, and brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded funds under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds, UCITS, hedge funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.

About German American Bancorp

German American Bancorp, Inc. operates as a financial holding company for German American Bank that provides retail and commercial banking services. The company operates through three segments: Core Banking, Wealth Management Services, and Insurance Operations. The Core Banking segment accepts deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Wealth Management segment provides trust, investment advisory, brokerage, and retirement planning services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. It also offers checking, saving, and individual retirement accounts; certificates of deposit; wire transfer; credit cards; home equity, mortgages, and small business; treasury management; and online and mobile banking, bill pay, digital wallet, mobile check deposit, credit score and report, money management, and estatements, as well as wealth advisory. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.