Analyzing Veritex (NASDAQ:VBTX) and RBB Bancorp (NASDAQ:RBB)

Veritex (NASDAQ:VBTXGet Rating) and RBB Bancorp (NASDAQ:RBBGet Rating) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, profitability and dividends.

Institutional and Insider Ownership

77.5% of Veritex shares are held by institutional investors. Comparatively, 36.3% of RBB Bancorp shares are held by institutional investors. 4.7% of Veritex shares are held by company insiders. Comparatively, 20.9% of RBB Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Veritex has a beta of 1.49, suggesting that its stock price is 49% more volatile than the S&P 500. Comparatively, RBB Bancorp has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Profitability

This table compares Veritex and RBB Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Veritex 37.12% 10.64% 1.45%
RBB Bancorp 35.39% 12.91% 1.48%

Dividends

Veritex pays an annual dividend of $0.80 per share and has a dividend yield of 2.5%. RBB Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 2.8%. Veritex pays out 28.7% of its earnings in the form of a dividend. RBB Bancorp pays out 18.9% 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. Veritex has increased its dividend for 2 consecutive years and RBB Bancorp has increased its dividend for 2 consecutive years. RBB Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Veritex and RBB Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Veritex $374.89 million 4.66 $139.58 million $2.79 11.60
RBB Bancorp $165.81 million 2.34 $56.91 million $2.97 6.82

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

Analyst Recommendations

This is a summary of current recommendations for Veritex and RBB Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veritex 0 0 2 1 3.33
RBB Bancorp 1 3 0 0 1.75

Veritex currently has a consensus price target of $46.33, indicating a potential upside of 43.14%. RBB Bancorp has a consensus price target of $27.25, indicating a potential upside of 34.50%. Given Veritex’s stronger consensus rating and higher possible upside, analysts plainly believe Veritex is more favorable than RBB Bancorp.

Summary

Veritex beats RBB Bancorp on 11 of the 17 factors compared between the two stocks.

Veritex Company Profile (Get Rating)

Veritex Holdings, Inc. operates as the bank holding company for Veritex Community Bank that provides various commercial banking products and services to small and medium-sized businesses, and professionals. The company accepts deposit products include demand, savings, money market, and time accounts. Its loan products include commercial real estate and general commercial, mortgage warehouse loans, residential real estate, construction and land, farmland, consumer, paycheck protection program, 1-4 family residential, agricultural, multi-family residential, and consumer loans, as well as purchased receivables financing. The company also provides interest rate swap services; and a range of online banking solutions, such as access to account balances, online transfers, online bill payment and electronic delivery of customer statements, and ATMs, as well as mobile banking, mail, and personal appointment. In addition, it offers debit cards, night depository services, direct deposits, cashier's checks, and letters of credit; treasury management services, including balance reporting, transfers between accounts, wire transfer initiation, automated clearinghouse origination, and stop payments; and cash management deposit products and services consisting of lockbox, remote deposit capture, positive pay, reverse positive pay, account reconciliation services, zero balance accounts, and sweep accounts. As of December 31, 2021, the company operated 18 full-service branches located in the Dallas-Fort Worth metroplex, and 10 full-service branches in the Houston metropolitan area. Veritex Holdings, Inc. was incorporated in 2009 and is headquartered in Dallas, Texas.

RBB Bancorp Company Profile (Get Rating)

RBB Bancorp operates as the bank holding company for Royal Business Bank that provides various banking products and services to the Chinese-American, Korean-American, and other Asian-American communities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company also offers commercial and industrial lines of credit, term loans, mortgage warehouse lines, and international trade discounts; commercial real estate loans; residential, commercial, and land acquisition and development construction loans; small business administration loans; and single-family residential mortgage loans. In addition, it provides international letters of credit, SWIFT, export advisory, trade finance discount, and foreign exchange services; and remote deposit, e-banking, and mobile banking services. The company primarily offers its products and services to individuals, businesses, municipalities, and other entities. As of December 31, 2021, it operated 23 branches in the Western region with branches in Los Angeles County, California; Orange County, California; Ventura County, California; Clark County, Nevada; Honolulu, Hawaii, as well as in Eastern region with branches in Manhattan, Brooklyn and Queens, New York; Chicago, Illinois and Edison, New Jersey. RBB Bancorp was founded in 2008 and is headquartered in Los Angeles, California.

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