Comparing Unity Bancorp (NASDAQ:UNTY) and SR Bancorp (NASDAQ:SRBK)

Unity Bancorp (NASDAQ:UNTY) and SR Bancorp (NASDAQ:SRBK) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, risk and dividends.

Dividends

Unity Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. SR Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Unity Bancorp pays out 11.3% of its earnings in the form of a dividend. SR Bancorp pays out 55.6% 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. Unity Bancorp has raised its dividend for 12 consecutive years. Unity Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

42.3% of Unity Bancorp shares are held by institutional investors. Comparatively, 24.7% of SR Bancorp shares are held by institutional investors. 28.9% of Unity Bancorp shares are held by insiders. Comparatively, 7.8% of SR Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Unity Bancorp and SR Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unity Bancorp	$188.41 million	2.81	$57.95 million	$5.67	9.33
SR Bancorp	$33.74 million	4.26	$5.14 million	$0.36	47.89

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Unity Bancorp and SR Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unity Bancorp	0	0	3	0	3.00
SR Bancorp	0	2	0	0	2.00

Unity Bancorp presently has a consensus price target of $65.00, indicating a potential upside of 22.85%. SR Bancorp has a consensus price target of $16.00, indicating a potential downside of 7.19%. Given Unity Bancorp’s stronger consensus rating and higher probable upside, equities analysts clearly believe Unity Bancorp is more favorable than SR Bancorp.

Risk and Volatility

Unity Bancorp has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500. Comparatively, SR Bancorp has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.

Profitability

This table compares Unity Bancorp and SR Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Unity Bancorp	30.76%	15.88%	1.80%
SR Bancorp	5.82%	1.27%	0.22%

Summary

Unity Bancorp beats SR Bancorp on 15 of the 17 factors compared between the two stocks.

About Unity Bancorp

Unity Bancorp, Inc. operates as a bank holding company for Unity Bank that provides range of commercial and retail banking services to individuals, small and medium sized businesses, and professional communities. It offers personal and business checking accounts, time deposits, money market accounts, savings accounts, and retirement accounts, as well as noninterest and interest-bearing demand deposits. The company also provides small business administration loans; commercial loans; and residential mortgage and consumer loans, including residential real estate, home equity lines and loans, and residential construction lines, as well as personal loans. In addition, it offers credit and debit cards, wire transfer, safe deposit box, automated teller, and internet and mobile banking services; and automated clearing house origination and remote deposit capture services. Unity Bancorp, Inc. was incorporated in 1991 and is headquartered in Clinton, New Jersey.

About SR Bancorp

SR Bancorp, Inc. operates as the holding company for Somerset Regal Bank that provides customary retail and commercial banking services to individuals, businesses, and local municipalities in the communities of Somerset, Middlesex, Hunterdon, and Essex counties in New Jersey. It offers deposit instruments, including noninterest-bearing demand deposits, interest-bearing demand accounts, savings accounts, money market accounts, and certificates of deposit. The company also provides loans comprising one- to four family-residential mortgage loans, home equity loans and lines of credit, unsecured personal loans, and rehabilitation loans; and bill payment services. In addition, it is involved in the investment activities. The company was founded in 1887 and is headquartered in Bound Brook, New Jersey.