Critical Review: Union Bankshares (UBSH) and Allegiance Bancshares (ABTX)

Union Bankshares (NASDAQ:UBSH) and Allegiance Bancshares (NASDAQ:ABTX) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Dividends

Union Bankshares pays an annual dividend of $0.92 per share and has a dividend yield of 2.6%. Allegiance Bancshares does not pay a dividend. Union Bankshares pays out 48.2% of its earnings in the form of a dividend. Union Bankshares has raised its dividend for 6 consecutive years.

Insider and Institutional Ownership

77.5% of Union Bankshares shares are held by institutional investors. Comparatively, 29.0% of Allegiance Bancshares shares are held by institutional investors. 1.6% of Union Bankshares shares are held by company insiders. Comparatively, 12.7% of Allegiance Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Union Bankshares has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500. Comparatively, Allegiance Bancshares has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500.

Profitability

This table compares Union Bankshares and Allegiance Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Union Bankshares 20.38% 9.36% 1.27%
Allegiance Bancshares 19.41% 10.35% 1.12%

Valuation & Earnings

This table compares Union Bankshares and Allegiance Bancshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Union Bankshares $401.87 million 5.74 $72.92 million $1.91 18.30
Allegiance Bancshares $125.30 million 6.51 $17.63 million $1.58 23.65

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Union Bankshares and Allegiance Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Union Bankshares 0 1 4 1 3.00
Allegiance Bancshares 0 0 0 1 4.00

Union Bankshares presently has a consensus price target of $43.83, suggesting a potential upside of 25.38%. Allegiance Bancshares has a consensus price target of $43.50, suggesting a potential upside of 16.43%. Given Union Bankshares’ higher possible upside, research analysts plainly believe Union Bankshares is more favorable than Allegiance Bancshares.

Summary

Union Bankshares beats Allegiance Bancshares on 11 of the 17 factors compared between the two stocks.

Union Bankshares Company Profile

Union Bankshares Corporation operates as the bank holding company for Union Bank & Trust that provides banking and related financial services to consumers and businesses. The company operates in two segments, Community Bank and Mortgage. It accepts various deposit products, including checking, savings, NOW, time deposit, and money market accounts, as well as certificates of deposit and other depository services. The company also offers loans for commercial, industrial, residential mortgage, and consumer purposes. In addition, it provides credit cards, automated teller machine (ATM) services, mobile and Internet banking services, and online bill payment services, as well as asset management, private banking, and trust services to individuals and corporations. Further, the company offers securities, brokerage, and investment advisory services; and originates and sells mortgage loan products in the secondary market principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area. As of January 1, 2018, it operated 150 branches and approximately 220 ATMs in Virginia. The company was formerly known as Union First Market Bankshares Corporation and changed its name to Union Bankshares Corporation in April 2014. Union Bankshares Corporation was founded in 1902 and is headquartered in Richmond, Virginia.

Allegiance Bancshares Company Profile

Allegiance Bancshares, Inc. operates as the bank holding company for Allegiance Bank that provides a range of commercial banking services primarily to small and medium-sized businesses, professionals, and individual customers. It accepts deposit products, including checking accounts, commercial accounts, savings accounts, and other time deposits comprising money market accounts and certificates of deposit. The company also grants various loan products, such as commercial and industrial loans; mortgage warehouse loans; commercial real estate loans, including multi-family residential loans; commercial real estate construction and land development loans; residential real estate loans, such as 1-4 family residential mortgage loans; residential construction loans; and consumer and other loans. In addition, it offers automated teller machines, drive-through services, and 24-hour depository facilities; mobile banking; and telephone, mail, and Internet banking services. Further, the company provides safe deposit boxes, debit cards, cash management and wire transfer services, night depository services, direct deposits, cashier's checks, and letters of credit. As of January 25, 2018, it operated 16 full-service banking locations and a loan production office in the Houston metropolitan area. The company was founded in 2007 and is headquartered in Houston, Texas.

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