Contrasting Capstar Financial Holdings (CSTR) & Columbia Banking System (COLB)

Capstar Financial Holdings (NASDAQ: CSTR) and Columbia Banking System (NASDAQ:COLB) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of current recommendations for Capstar Financial Holdings and Columbia Banking System, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capstar Financial Holdings 0 5 0 0 2.00
Columbia Banking System 0 2 2 0 2.50

Capstar Financial Holdings currently has a consensus target price of $18.00, suggesting a potential downside of 14.97%. Columbia Banking System has a consensus target price of $45.00, suggesting a potential upside of 3.90%. Given Columbia Banking System’s stronger consensus rating and higher possible upside, analysts plainly believe Columbia Banking System is more favorable than Capstar Financial Holdings.

Dividends

Columbia Banking System pays an annual dividend of $0.88 per share and has a dividend yield of 2.0%. Capstar Financial Holdings does not pay a dividend. Columbia Banking System pays out 44.7% of its earnings in the form of a dividend.

Profitability

This table compares Capstar Financial Holdings and Columbia Banking System’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capstar Financial Holdings 7.05% 9.27% 0.95%
Columbia Banking System 25.82% 8.99% 1.20%

Earnings and Valuation

This table compares Capstar Financial Holdings and Columbia Banking System’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capstar Financial Holdings $39.68 million 6.00 $3.93 million $0.35 60.49
Columbia Banking System $430.80 million 5.87 $115.01 million $1.97 21.98

Columbia Banking System has higher revenue and earnings than Capstar Financial Holdings. Columbia Banking System is trading at a lower price-to-earnings ratio than Capstar Financial Holdings, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

35.4% of Capstar Financial Holdings shares are owned by institutional investors. Comparatively, 95.3% of Columbia Banking System shares are owned by institutional investors. 19.3% of Capstar Financial Holdings shares are owned by insiders. Comparatively, 1.2% of Columbia Banking System shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Columbia Banking System beats Capstar Financial Holdings on 11 of the 15 factors compared between the two stocks.

About Capstar Financial Holdings

CapStar Financial Holdings, Inc. is a bank holding company. The Company operates primarily through its subsidiary, CapStar Bank. CapStar Bank is a commercial bank. The Company’s lines of business include commercial and industrial, commercial real estate, healthcare, correspondent banking, personal and private banking and wealth management, and mortgage banking. Its products and services include commercial and industrial loans to small and medium sized businesses, with a particular focus on businesses operating in the healthcare industry; commercial real estate loans; private banking and wealth management services for the owners and operators of business clients and other high net worth individuals, and correspondent banking services. As of June 30, 2016, the Company had seven locations, five of which are retail bank branches and two of which are mortgage origination offices.

About Columbia Banking System

Columbia Banking System, Inc. (Columbia) is a bank holding company for Columbia State Bank (the Bank) and Columbia Trust Company (Columbia Trust). The Company provides a range of banking services to small and medium-sized businesses, professionals and individuals. It offers products and services, which include Personal Banking, Business Banking and Wealth Management. Its Personal Banking products and services include Checking and Saving Accounts; Consumer Lending; Digital Banking; Residential Lending, and VISA Card Services. Its Business Banking products and services include Agricultural Lending; Commercial and Industrial Lending; International Banking; Merchant Card Services; Municipal Lending; Real Estate and Real Estate Construction Lending; Remote Deposit Capture; Small Business Administration (SBA) Lending; Small Business Services, and Treasury Management. Its Wealth Management products and services include Investment Services, Private Banking and Professional Banking.

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