Investar (NASDAQ:ISTR) versus First Guaranty Bancshares (NASDAQ:FGBI) Critical Survey

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

Valuation & Earnings

This table compares Investar and First Guaranty Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Investar	$153.48 million	1.82	$22.90 million	$2.14	13.29
First Guaranty Bancshares	$96.48 million	1.34	$12.45 million	($4.13)	-2.04

Investar has higher revenue and 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.

Dividends

Investar pays an annual dividend of $0.44 per share and has a dividend yield of 1.5%. First Guaranty Bancshares pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. Investar pays out 20.6% of its earnings in the form of a dividend. First Guaranty Bancshares pays out -1.0% 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. 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.

Profitability

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

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

Insider & Institutional Ownership

50.2% of Investar shares are held by institutional investors. Comparatively, 39.5% of First Guaranty Bancshares shares are held by institutional investors. 8.8% of Investar shares are held by company insiders. Comparatively, 47.2% of First Guaranty Bancshares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Investar has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, First Guaranty Bancshares has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Investar and First Guaranty Bancshares, as provided by MarketBeat.com.

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

Investar presently has a consensus price target of $29.00, indicating a potential upside of 1.93%. Given Investar’s stronger consensus rating and higher possible upside, analysts clearly believe Investar is more favorable than First Guaranty Bancshares.

Summary

Investar beats First Guaranty Bancshares on 16 of the 18 factors compared between the two stocks.

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.

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.