First Foundation (NASDAQ: FFWM – Get a rating) and Invest (NASDAQ: ISTR – Get a rating) are both small cap finance companies, but which is the better investment? We’ll compare the two companies based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.
Benefits and evaluation
This table compares the revenue, earnings per share and valuation of First Foundation and Investar.
|Gross revenue||Price/sales ratio||Net revenue||Earnings per share||Price/earnings ratio|
|First Foundation||$317.67 million||3.75||$109.51 million||$2.47||8.53|
|Invest||$107.58 million||2.08||$8.00 million||$1.22||17.79|
First Foundation has higher revenue and profit than Investar. First Foundation trades at a lower price-to-earnings ratio than Investar, indicating that it is currently the more affordable of the two stocks.
This is a summary of the current ratings and price targets for First Foundation and Investar, as provided by MarketBeat.
|Sales Ratings||Hold odds||Buy reviews||Strong buy odds||Rating|
First Foundation currently has a consensus target price of $31.00, suggesting a potential upside of 47.13%. Investar has a consensus target price of $20.00, suggesting a potential downside of 7.83%. Given First Foundation’s stronger consensus rating and higher possible upside, analysts clearly believe that First Foundation is more favorable than Investor.
This table compares the net margins, return on equity and return on assets of First Foundation and Investor.
|Net margins||Return on equity||return on assets|
First Foundation pays an annual dividend of $0.44 per share and has a dividend yield of 2.1%. Investar pays an annual dividend of $0.34 per share and has a dividend yield of 1.6%. First Foundation pays 17.8% of its profits as a dividend. Investar pays 27.9% of its profits as a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings over the next few years. First Foundation has increased its dividend for 3 consecutive years and Investar has increased its dividend for 8 consecutive years. First Foundation is clearly the better dividend-paying stock, given its higher yield and lower payout ratio.
Risk and Volatility
First Foundation has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. In comparison, Investar has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500.
Insider and Institutional Ownership
60.5% of First Foundation’s shares are held by institutional investors. Comparatively, 56.7% of Investar shares are held by institutional investors. 13.9% of the shares of First Foundation are held by insiders of the company. By comparison, 10.3% of Investar’s stock is held by company insiders. Strong institutional ownership indicates that large money managers, endowments, and hedge funds believe a company is poised for long-term growth.
First Foundation beats Investar on 15 of the 17 factors compared between the two stocks.
About First Foundation (Get a rating)
First Foundation Inc., through its subsidiaries, provides retail, corporate and private wealth management banking services in the United States. It operates through two segments, Banking and Wealth Management. The Company offers a range of bank deposit products, including personal and business checking accounts, savings accounts, interest-bearing negotiable promissory withdrawal accounts, money market accounts and term deposit certificates; and lending products consisting of multi-family and single-family residential real estate loans, commercial real estate loans and commercial term loans and lines of credit, as well as consumer loans, such as personal installment loans and lines of credit , and home equity lines of credit . It also provides various specialized services including trust services, Internet and mobile banking services, remote deposit collection services, merchant credit card services, ATM cards, Visa debit cards and business transfer accounts, as well as insurance brokerage services and equipment financing solutions. In addition, the company offers investment management and financial planning services; cash management services; advisory and coordination services in the field of estate planning, retirement planning, and charitable and corporate ownership matters; and financial, investment and economic advisory and related services. In addition, it provides support services, including the processing and transmission of financial and economic data for charitable organizations. The company operates through a network of 28 branches and 3 loan origination offices in California, Nevada, Texas and Hawaii. First Foundation Inc. was founded in 1985 and is headquartered in Dallas, Texas.
About Investar (Get a rating)
Investar Holding Corporation operates as a bank holding company for Investar Bank which provides a range of commercial banking products to individuals and small and medium businesses in South Louisiana. The Company offers various deposit products and services, such as individual savings, checking, money market and retirement accounts, as well as various certificates of deposit; debit cards; and mobile banking. It also offers 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 and multi-family residential properties; one to four family residential real estate loans, such as second mortgages; consumer loans, such as secured and unsecured installment and installment loans, home equity loans and lines of credit, automobile loans, and loans for personal, family and household purposes. In addition, the Company offers cash management products, including remote deposit capture, vault payment processing, virtual vault, e-statements, positive pay, issue and transfer. ACH banking, investment sweep accounts and Internet banking for businesses. In addition, it provides various other banking services, such as cashier’s checks, payroll and social security checks direct deposit, night deposit, mail banking, ATM, ATMs, merchant card and mobile wallet payment services. The company operates through a network of 33 full-service branches. Investar Holding Corporation was founded in 2006 and is headquartered in Baton Rouge, Louisiana.
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