Reviewing Bridge Bancorp (BDGE) & Guaranty Federal Bancshares (GFED)

Bridge Bancorp (NASDAQ: BDGE) and Guaranty Federal Bancshares (NASDAQ:GFED) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, risk, earnings, dividends, valuation, profitability and analyst recommendations.

Dividends

Bridge Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 2.5%. Guaranty Federal Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Bridge Bancorp pays out 48.4% of its earnings in the form of a dividend. Guaranty Federal Bancshares pays out 28.4% 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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Bridge Bancorp and Guaranty Federal Bancshares, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bridge Bancorp 0 2 0 0 2.00
Guaranty Federal Bancshares 0 0 1 0 3.00

Bridge Bancorp presently has a consensus target price of $38.50, suggesting a potential upside of 5.77%. Guaranty Federal Bancshares has a consensus target price of $25.00, suggesting a potential upside of 12.76%. Given Guaranty Federal Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Guaranty Federal Bancshares is more favorable than Bridge Bancorp.

Valuation & Earnings

This table compares Bridge Bancorp and Guaranty Federal Bancshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bridge Bancorp $153.76 million 4.67 $35.49 million $1.90 19.16
Guaranty Federal Bancshares $30.26 million 3.24 $5.59 million $1.41 15.72

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

Insider & Institutional Ownership

56.8% of Bridge Bancorp shares are held by institutional investors. Comparatively, 25.8% of Guaranty Federal Bancshares shares are held by institutional investors. 5.3% of Bridge Bancorp shares are held by insiders. Comparatively, 10.0% of Guaranty Federal Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Bridge Bancorp and Guaranty Federal Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bridge Bancorp 22.62% 8.52% 0.88%
Guaranty Federal Bancshares 18.63% 8.65% 0.85%

Volatility and Risk

Bridge Bancorp has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Guaranty Federal Bancshares has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Summary

Bridge Bancorp beats Guaranty Federal Bancshares on 10 of the 16 factors compared between the two stocks.

Bridge Bancorp Company Profile

Bridge Bancorp, Inc. is a bank holding company for The Bridgehampton National Bank (the Bank). The Bank’s operations include its real estate investment trust subsidiary, Bridgehampton Community, Inc. (BCI), a financial title insurance subsidiary, Bridge Abstract LLC (Bridge Abstract), and an investment services subsidiary, Bridge Financial Services LLC (Bridge Financial Services). As of December 31, 2016, the Bank operated 40 branches in its primary market areas of Suffolk and Nassau Counties on Long Island and the New York City boroughs, including 38 in Suffolk and Nassau Counties, one in Bayside, Queens and one in Manhattan. The Bank engages in full service commercial and consumer banking business, including accepting time, savings and demand deposits from the consumers, businesses and local municipalities in its market area. The Bank also offers the Certificate of Deposit Account Registry Service (CDARS) and Insured Cash Sweep (ICS) programs.

Guaranty Federal Bancshares Company Profile

Guaranty Federal Bancshares, Inc. is the savings and loan holding company for Guaranty Federal Savings Bank (the Bank). The Company operates through banking operation segment. The banking segment is engaged in the business of originating mortgage loans secured by one- to four-family residences, multi-family, construction, commercial and consumer loans. The Bank’s primary market areas are Greene and Christian Counties, which are in the southwestern corner of Missouri, and includes the cities of Springfield, Nixa and Ozark, and Missouri. The Bank’s loan portfolio consists of mortgage loans, including one- to four-family loans, multi-family loans, construction loans and commercial real estate loans; commercial business loans, and consumer loans. The Bank invests in mortgage-backed securities, the United States Government and federal agency securities, and other marketable securities. The Company owns Guaranty Statutory Trust I and Guaranty Statutory Trust II.

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