First Bancorp (NASDAQ:FBNC) & Bank of the James Financial Group (NASDAQ:BOTJ) Critical Analysis

First Bancorp (NASDAQ:FBNC) and Bank of the James Financial Group (NASDAQ:BOTJ) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Valuation and Earnings

This table compares First Bancorp and Bank of the James Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bancorp	$549.30 million	4.20	$111.05 million	$2.68	20.78
Bank of the James Financial Group	$62.51 million	1.51	$9.02 million	$2.00	10.36

First Bancorp has higher revenue and earnings than Bank of the James Financial Group. Bank of the James Financial Group is trading at a lower price-to-earnings ratio than First Bancorp, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

68.4% of First Bancorp shares are held by institutional investors. Comparatively, 18.5% of Bank of the James Financial Group shares are held by institutional investors. 2.0% of First Bancorp shares are held by company insiders. Comparatively, 15.4% of Bank of the James Financial Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

First Bancorp has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Bank of the James Financial Group has a beta of 0.12, indicating that its share price is 88% less volatile than the S&P 500.

Profitability

This table compares First Bancorp and Bank of the James Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Bancorp	19.24%	10.41%	1.30%
Bank of the James Financial Group	14.43%	12.47%	0.89%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for First Bancorp and Bank of the James Financial Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bancorp	0	2	3	1	2.83
Bank of the James Financial Group	0	1	0	0	2.00

First Bancorp presently has a consensus price target of $61.25, suggesting a potential upside of 9.96%. Given First Bancorp’s stronger consensus rating and higher possible upside, equities research analysts clearly believe First Bancorp is more favorable than Bank of the James Financial Group.

Dividends

First Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 1.7%. Bank of the James Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. First Bancorp pays out 34.3% of its earnings in the form of a dividend. Bank of the James Financial Group pays out 20.0% 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. Bank of the James Financial Group has increased its dividend for 5 consecutive years. Bank of the James Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

First Bancorp beats Bank of the James Financial Group on 13 of the 18 factors compared between the two stocks.

About First Bancorp

First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses. The company accepts deposit products, such as checking, savings, and money market accounts, as well as time deposits, including certificate of deposits and individual retirement accounts. It also offers loans for a range of consumer and commercial purposes comprising loans for business, real estate, personal, home improvement, and automobiles, as well as residential mortgages and small business administration loans; and accounts receivable financing and factoring, inventory financing, and purchase order financing services. In addition, the company provides credit and debit cards, letter of credits, and safe deposit box rental services, as well as electronic funds transfer services consisting of wire transfers; and internet and mobile banking, cash management, bank-by-phone services, and remote deposit capture services. Further, it offers investment and insurance products, such as mutual funds, annuities, long-term care insurance, life insurance, and company retirement plans, as well as property and casualty insurance products; and financial planning services. The company was founded in 1934 and is headquartered in Southern Pines, North Carolina.

About Bank of the James Financial Group

Bank of the James Financial Group, Inc. operates as the bank holding company for Bank of the James that provides general retail and commercial banking services to individuals, businesses, associations and organizations, and governmental authorities in Virginia, the United States. It offers checking, savings, individual retirement, and health care saving accounts, as well as other time deposits, including money market accounts and certificates of deposit. The company also provides loans to small- and medium-sized businesses for the purchases of equipment, facilities upgrades, inventory acquisition, and various working capital purposes; commercial and residential construction and development loans; commercial real estate mortgage loans; residential mortgage loans; and secured and unsecured consumer loans, such as lines of credit and overdraft lines of credit, as well as personal, automobile, installment, demand, and home equity loans for personal, family, or household purposes. In addition, it offers other banking services, including safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, treasury management, and credit card merchant services. Further, the company provides mortgage banking; investment advisory services; securities brokerage and investment services; and telephone and internet banking services comprising online bill pay, as well as acts as an agent for insurance and annuity products. The company was founded in 1999 and is headquartered in Lynchburg, Virginia.