Contrasting Investar (NASDAQ:ISTR) and First Guaranty Bancshares (NASDAQ:FGBI)

First Guaranty Bancshares (NASDAQ:FGBI) and Investar (NASDAQ:ISTR) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

39.5% of First Guaranty Bancshares shares are owned by institutional investors. Comparatively, 50.2% of Investar shares are owned by institutional investors. 47.2% of First Guaranty Bancshares shares are owned by company insiders. Comparatively, 8.8% of Investar 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.

Risk & Volatility

First Guaranty Bancshares has a beta of 0.32, suggesting that its stock price is 68% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Dividends

First Guaranty Bancshares pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. Investar pays an annual dividend of $0.44 per share and has a dividend yield of 1.5%. First Guaranty Bancshares pays out -1.0% of its earnings in the form of a dividend. Investar pays out 20.6% 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. Investar has increased its dividend for 10 consecutive years. Investar is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for First Guaranty Bancshares and Investar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Guaranty Bancshares	1	1	0	0	1.50
Investar	0	0	2	1	3.33

Investar has a consensus price target of $29.00, suggesting a potential downside of 2.23%. Given Investar’s stronger consensus rating and higher probable upside, analysts plainly believe Investar is more favorable than First Guaranty Bancshares.

Earnings & Valuation

This table compares First Guaranty Bancshares and Investar”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Guaranty Bancshares	$246.45 million	0.56	$12.45 million	($4.13)	-2.17
Investar	$153.48 million	1.90	$22.90 million	$2.14	13.86

Investar has lower revenue, but higher earnings than First Guaranty Bancshares. First Guaranty Bancshares is trading at a lower price-to-earnings ratio than Investar, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares First Guaranty Bancshares and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Guaranty Bancshares	-25.11%	-20.76%	-1.14%
Investar	14.92%	9.31%	0.87%

Summary

Investar beats First Guaranty Bancshares on 15 of the 18 factors compared between the two stocks.

About First Guaranty Bancshares

First Guaranty Bancshares, Inc. operates as the holding company for First Guaranty Bank that provides commercial banking services in Louisiana and Texas. It offers various deposit products, including personal and business checking, savings, money market, and demand accounts, as well as time deposits to consumers, small businesses, and municipalities. The company provides loans, such as non-farm, non-residential loans secured by real estate, commercial and industrial loans, one- to four-family residential loans, multifamily loans, construction and land development loans, agricultural loans, farmland loans, and consumer and other loans to small to medium-sized businesses and professionals, and individuals. In addition, it offers a range of consumer services, including credit cards, mobile deposit capture, safe deposit boxes, official checks, online and mobile banking, automated teller machines, and online bill pay; provides additional solutions, such as merchant services, remote deposit capture, and lockbox services to business customers; and invests a portion of its assets in securities issued by the United States Government and its agencies, state and municipal obligations, corporate debt securities, mutual funds, and equity securities, as well as invests in mortgage-backed securities primarily issued or guaranteed by United States Government agencies or enterprises. First Guaranty Bancshares, Inc. was founded in 1934 and is headquartered in Hammond, Louisiana.

About Investar

Investar Holding Corporation operates as the bank holding company for Investar Bank that provides a range of commercial banking products to individuals, professionals, and small to medium-sized businesses in south Louisiana, southeast Texas, and Alabama in the United States. The company offers various deposit products and services, such as savings, checking, money market, and individual retirement accounts, as well as various certificates of deposit; debit and credit cards; internet, mobile, and video banking services; and reciprocal deposit products. It also provides commercial real estate loans; commercial and industrial loans, including working capital lines of credit and equipment loans; loans for the construction of commercial projects, and single family residential and multifamily properties; one-to-four family residential real estate loans, such as second mortgage loans; and consumer loans, such as secured and unsecured installment and term loans, home equity loans and lines of credit, and auto loans, as well as loans for personal, family, and household purposes. In addition, the company offers treasury management products, including remote deposit capture, lockbox payment processing, virtual vault, positive pay, ACH origination, wire transfer, investment sweep accounts, and business internet banking services. Further, it provides various other banking services, such as cashiers' checks, direct deposit of payroll and social security checks, night depository, bank-by-mail, automated teller machines, electronic statements, interactive teller machines, online account opening, and mobile wallet payment services. Investar Holding Corporation was founded in 2006 and is headquartered in Baton Rouge, Louisiana.