Reviewing S&T Bancorp (NASDAQ:STBA) and National Bankshares (NASDAQ:NKSH)

S&T Bancorp (NASDAQ:STBA) and National Bankshares (NASDAQ:NKSH) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Institutional and Insider Ownership

65.2% of S&T Bancorp shares are owned by institutional investors. Comparatively, 29.7% of National Bankshares shares are owned by institutional investors. 1.2% of S&T Bancorp shares are owned by company insiders. Comparatively, 3.3% of National Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares S&T Bancorp and National Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
S&T Bancorp	25.10%	10.11%	1.46%
National Bankshares	24.08%	11.09%	1.14%

Analyst Recommendations

This is a summary of current ratings and price targets for S&T Bancorp and National Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
S&T Bancorp	0	6	2	0	2.25
National Bankshares	0	1	1	0	2.50

S&T Bancorp currently has a consensus price target of $52.20, indicating a potential upside of 3.18%. Given S&T Bancorp’s higher probable upside, research analysts clearly believe S&T Bancorp is more favorable than National Bankshares.

Volatility and Risk

S&T Bancorp has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500. Comparatively, National Bankshares has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Earnings & Valuation

This table compares S&T Bancorp and National Bankshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
S&T Bancorp	$568.51 million	3.14	$134.23 million	$3.94	12.84
National Bankshares	$85.32 million	3.04	$15.83 million	$3.35	12.17

S&T Bancorp has higher revenue and earnings than National Bankshares. National Bankshares is trading at a lower price-to-earnings ratio than S&T Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

S&T Bancorp pays an annual dividend of $1.48 per share and has a dividend yield of 2.9%. National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 3.7%. S&T Bancorp pays out 37.6% of its earnings in the form of a dividend. National Bankshares pays out 44.8% 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. S&T Bancorp has raised its dividend for 13 consecutive years.

Summary

S&T Bancorp beats National Bankshares on 13 of the 17 factors compared between the two stocks.

About S&T Bancorp

S&T Bancorp, Inc. is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. The company was founded on March 17, 1983 and is headquartered in Indiana, PA.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.