Analyzing Investar (NASDAQ:ISTR) & Burke & Herbert Financial Services (NASDAQ:BHRB)

Burke & Herbert Financial Services (NASDAQ:BHRB) and Investar (NASDAQ:ISTR) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Dividends

Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.2%. Investar pays an annual dividend of $0.48 per share and has a dividend yield of 1.7%. Burke & Herbert Financial Services pays out 35.3% of its earnings in the form of a dividend. Investar pays out 19.8% 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. Burke & Herbert Financial Services has increased its dividend for 1 consecutive years and Investar has increased its dividend for 10 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Burke & Herbert Financial Services and Investar, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Burke & Herbert Financial Services	0	3	2	1	2.67
Investar	0	2	1	0	2.33

Burke & Herbert Financial Services currently has a consensus price target of $76.67, suggesting a potential upside of 11.30%. Investar has a consensus price target of $31.50, suggesting a potential upside of 9.30%. Given Burke & Herbert Financial Services’ stronger consensus rating and higher probable upside, research analysts plainly believe Burke & Herbert Financial Services is more favorable than Investar.

Profitability

This table compares Burke & Herbert Financial Services and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Burke & Herbert Financial Services	18.86%	13.66%	1.46%
Investar	17.55%	11.65%	1.14%

Earnings and Valuation

This table compares Burke & Herbert Financial Services and Investar”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Burke & Herbert Financial Services	$358.66 million	3.88	$117.31 million	$6.24	11.04
Investar	$153.48 million	2.59	$22.90 million	$2.43	11.86

Burke & Herbert Financial Services has higher revenue and earnings than Investar. Burke & Herbert Financial Services is trading at a lower price-to-earnings ratio than Investar, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Burke & Herbert Financial Services has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Institutional and Insider Ownership

50.2% of Investar shares are owned by institutional investors. 12.0% of Burke & Herbert Financial Services shares are owned by insiders. Comparatively, 10.6% of Investar shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Burke & Herbert Financial Services beats Investar on 14 of the 18 factors compared between the two stocks.

About Burke & Herbert Financial Services

Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.

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.