Contrasting German American Bancorp. (GABC) & Investar (ISTR)

German American Bancorp. (NASDAQ: GABC) and Investar (NASDAQ:ISTR) are both small-cap financials companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings for German American Bancorp. and Investar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
German American Bancorp. 0 4 0 0 2.00
Investar 0 1 3 0 2.75

German American Bancorp. currently has a consensus price target of $38.67, indicating a potential upside of 12.31%. Investar has a consensus price target of $27.67, indicating a potential upside of 13.16%. Given Investar’s stronger consensus rating and higher probable upside, analysts plainly believe Investar is more favorable than German American Bancorp..

Risk & Volatility

German American Bancorp. has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, Investar has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500.

Valuation & Earnings

This table compares German American Bancorp. and Investar’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
German American Bancorp. $142.88 million 5.53 $40.68 million $1.77 19.45
Investar $57.16 million 4.07 $8.20 million $0.97 25.21

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

Dividends

German American Bancorp. pays an annual dividend of $0.60 per share and has a dividend yield of 1.7%. Investar pays an annual dividend of $0.13 per share and has a dividend yield of 0.5%. German American Bancorp. pays out 33.9% of its earnings in the form of a dividend. Investar pays out 13.4% 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.

Profitability

This table compares German American Bancorp. and Investar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
German American Bancorp. 28.47% 10.90% 1.28%
Investar 14.35% 6.37% 0.74%

Insider & Institutional Ownership

36.6% of German American Bancorp. shares are owned by institutional investors. Comparatively, 57.0% of Investar shares are owned by institutional investors. 8.5% of German American Bancorp. shares are owned by insiders. Comparatively, 8.8% of Investar shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

German American Bancorp. beats Investar on 9 of the 16 factors compared between the two stocks.

German American Bancorp. Company Profile

German American Bancorp, Inc. is a bank holding company. As of December 31, 2016, the Company, through its banking subsidiary German American Bancorp, operated 51 banking offices in 19 contiguous southern Indiana counties and one northern Kentucky county. Its segments are core banking, trust and investment advisory services, insurance, and other. The core banking segment involves attracting deposits from the general public and using such funds to originate consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, primarily in its local markets. The core banking segment also involves the sale of residential mortgage loans in the secondary market. The trust and investment advisory services segment involves providing trust, investment advisory, and brokerage services to customers. The insurance segment offers a range of personal and corporate property and casualty insurance products, in its banking subsidiary’s local markets.

Investar Company Profile

Investar Holding Corporation is financial holding company that conducts its operations through, Investar Bank (the Bank), which is a commercial bank. The Company offers a range of commercial and retail lending products throughout its market areas, including business loans to small to medium-sized businesses, as well as loans to individuals. It serves its primary markets of Baton Rouge, New Orleans, Hammond and Lafayette, Louisiana, and their surrounding metropolitan areas from its office located in Baton Rouge and from approximately 10 additional service branches. The Bank’s other banking services include cashiers’ checks, direct deposit of payroll and Social Security checks, night depository, bank-by-mail, automated teller machines with deposit automation and debit cards. The Company’s business lending products include owner-occupied commercial real estate loans, construction loans, and commercial and industrial loans, such as term loans, equipment financing and lines of credit.

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