Capstar Financial Holdings (NASDAQ: CSTR) and First Business Financial Services (NASDAQ:FBIZ) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.
First Business Financial Services pays an annual dividend of $0.52 per share and has a dividend yield of 2.5%. Capstar Financial Holdings does not pay a dividend. First Business Financial Services pays out 38.2% of its earnings in the form of a dividend.
Institutional & Insider Ownership
38.2% of Capstar Financial Holdings shares are held by institutional investors. Comparatively, 58.6% of First Business Financial Services shares are held by institutional investors. 19.3% of Capstar Financial Holdings shares are held by company insiders. Comparatively, 8.3% of First Business Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares Capstar Financial Holdings and First Business Financial Services’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Capstar Financial Holdings||$36.95 million||5.18||$2.25 million||$0.20||85.20|
|First Business Financial Services||$66.32 million||2.78||$11.85 million||$1.36||15.53|
First Business Financial Services has higher revenue and earnings than Capstar Financial Holdings. First Business Financial Services 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.
This table compares Capstar Financial Holdings and First Business Financial Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Capstar Financial Holdings||3.40%||7.70%||0.79%|
|First Business Financial Services||12.64%||7.25%||0.66%|
This is a summary of current ratings and target prices for Capstar Financial Holdings and First Business Financial Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Capstar Financial Holdings||0||5||0||0||2.00|
|First Business Financial Services||0||3||0||0||2.00|
Capstar Financial Holdings presently has a consensus price target of $19.00, indicating a potential upside of 11.50%. First Business Financial Services has a consensus price target of $24.50, indicating a potential upside of 16.00%. Given First Business Financial Services’ higher probable upside, analysts plainly believe First Business Financial Services is more favorable than Capstar Financial Holdings.
First Business Financial Services beats Capstar Financial Holdings on 7 of the 13 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 First Business Financial Services
First Business Financial Services, Inc. (FBFS) is a bank holding company. The Company engages in the commercial banking business through its bank subsidiaries, which include First Business Bank (FBB), First Business Bank-Milwaukee (FBB-Milwaukee) and Alterra Bank (Alterra) (FBB and FBB-Milwaukee and, together with FBB, the Banks). The operations of FBFS are conducted through the Banks and certain subsidiaries of FBB. The Banks operate as business banks focusing on delivering a line of commercial banking products, including commercial loans and commercial real estate loans, and services to meet the needs of small- and medium-sized businesses, business owners, executives, professionals and high net worth individuals. Its business lines include commercial lending, asset-based financing, equipment financing, small business administration (SBA) lending, treasury management services, and trust and investment services. Its investments include short-term investments and securities.
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