Reviewing Investar (NASDAQ:ISTR) and Isabella Bank (OTCMKTS:ISBA)

Investar (NASDAQ:ISTR) and Isabella Bank (OTCMKTS:ISBA) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitability.

Institutional and Insider Ownership

50.2% of Investar shares are held by institutional investors. 8.7% of Investar shares are held by insiders. Comparatively, 9.7% of Isabella Bank shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Investar has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Isabella Bank has a beta of -0.05, meaning that its share price is 105% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Investar and Isabella Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Investar	0	0	2	0	3.00
Isabella Bank	0	1	0	0	2.00

Investar currently has a consensus price target of $16.75, indicating a potential downside of 11.61%. Isabella Bank has a consensus price target of $22.00, indicating a potential upside of 7.84%. Given Isabella Bank’s higher probable upside, analysts clearly believe Isabella Bank is more favorable than Investar.

Earnings and Valuation

This table compares Investar and Isabella Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Investar	$79.24 million	2.35	$16.68 million	$1.79	10.59
Isabella Bank	$93.46 million	1.63	$18.17 million	$2.12	9.62

Isabella Bank has higher revenue and earnings than Investar. Isabella Bank 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 $0.42 per share and has a dividend yield of 2.2%. Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 5.5%. Investar pays out 23.5% of its earnings in the form of a dividend. Isabella Bank pays out 52.8% 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.

Profitability

This table compares Investar and Isabella Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Investar	10.04%	6.69%	0.53%
Isabella Bank	14.98%	7.50%	0.72%

Summary

Isabella Bank beats Investar on 9 of the 16 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 Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.