Analyzing Green Bancorp (GNBC) & Independent Bank Group (IBTX)

Green Bancorp (NASDAQ: GNBC) and Independent Bank Group (NASDAQ:IBTX) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Dividends

Independent Bank Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. Green Bancorp does not pay a dividend. Independent Bank Group pays out 13.2% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Green Bancorp and Independent Bank Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Green Bancorp $105.91 million 6.98 $13.33 million $0.36 55.42
Independent Bank Group $226.55 million 6.72 $84.48 million $3.04 18.03

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

Profitability

This table compares Green Bancorp and Independent Bank Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Green Bancorp 7.69% 3.14% 0.34%
Independent Bank Group 23.52% 8.43% 1.05%

Institutional and Insider Ownership

60.7% of Green Bancorp shares are owned by institutional investors. Comparatively, 46.5% of Independent Bank Group shares are owned by institutional investors. 16.7% of Green Bancorp shares are owned by insiders. Comparatively, 7.7% of Independent Bank Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Green Bancorp has a beta of 2.15, meaning that its share price is 115% more volatile than the S&P 500. Comparatively, Independent Bank Group has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Green Bancorp and Independent Bank Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Green Bancorp 0 0 2 0 3.00
Independent Bank Group 0 0 5 0 3.00

Green Bancorp currently has a consensus price target of $18.00, indicating a potential downside of 9.77%. Independent Bank Group has a consensus price target of $71.40, indicating a potential upside of 30.29%. Given Independent Bank Group’s higher probable upside, analysts plainly believe Independent Bank Group is more favorable than Green Bancorp.

Summary

Independent Bank Group beats Green Bancorp on 9 of the 15 factors compared between the two stocks.

About Green Bancorp

Green Bancorp, Inc. is a bank holding company. As of December 31, 2016, the Company’s subsidiary, Green Bank, N.A., a nationally chartered commercial bank, provided commercial and private banking services primarily to Texas based customers through 22 full service branches in the Houston and Dallas metropolitan statistical areas (MSAs) and other markets. The Company provides banking services to a range of customers. It offers a suite of online banking solutions, including access to account balances, online transfers, online bill payment and electronic delivery of customer statements, as well as extended drive through hours, automated teller machines (ATMs), Bank at Work and banking by telephone, mail and personal appointment. The Company also offers debit cards, night depository, direct deposit, cashier’s checks and letters of credit, as well as treasury management services, wire transfer services and automated clearing house (ACH) services.

About Independent Bank Group

Independent Bank Group, Inc. is a bank holding company. Through the Company’s subsidiary, Independent Bank (the Bank), the Company provides a range of commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. As of December 31, 2016, the Company operated 41 banking offices in the Dallas/North Texas area, the Austin/Central Texas area, and the Houston metropolitan area. The Company offers residential mortgages through its mortgage brokerage division. As a mortgage broker, the Company originates residential mortgages, which are sold into the secondary market shortly after closing. The Company also provides wealth management services to its customers, including investment advisory and other related services. The Company offers a range of commercial and retail lending products to businesses, professionals and individuals. Deposits are the Company’s principal source of funds for use in lending and other general banking purposes.

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