Head to Head Survey: BayFirst Financial (NASDAQ:BAFN) and Investar (NASDAQ:ISTR)

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

Risk and Volatility

BayFirst Financial has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Profitability

This table compares BayFirst Financial and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BayFirst Financial	6.65%	10.14%	0.72%
Investar	14.33%	8.84%	0.80%

Dividends

BayFirst Financial pays an annual dividend of $0.32 per share and has a dividend yield of 3.8%. Investar pays an annual dividend of $0.44 per share and has a dividend yield of 1.9%. BayFirst Financial pays out 18.5% of its earnings in the form of a dividend. Investar pays out 19.6% 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. Investar has increased its dividend for 10 consecutive years. BayFirst Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares BayFirst Financial and Investar”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BayFirst Financial	$143.28 million	0.25	$12.60 million	$1.73	4.92
Investar	$158.07 million	1.42	$20.25 million	$2.24	10.18

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

Analyst Recommendations

This is a summary of current ratings and target prices for BayFirst Financial and Investar, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BayFirst Financial	0	0	0	0	0.00
Investar	0	0	1	0	3.00

Investar has a consensus target price of $27.00, suggesting a potential upside of 18.42%. Given Investar’s stronger consensus rating and higher probable upside, analysts plainly believe Investar is more favorable than BayFirst Financial.

Institutional & Insider Ownership

16.9% of BayFirst Financial shares are owned by institutional investors. Comparatively, 50.2% of Investar shares are owned by institutional investors. 18.8% of BayFirst Financial shares are owned by company insiders. Comparatively, 8.8% of Investar shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Investar beats BayFirst Financial on 13 of the 17 factors compared between the two stocks.

About BayFirst Financial

BayFirst Financial Corp. operates as the bank holding company for BayFirst National Bank that provides community banking services for businesses and individuals. The company offers checking, savings, NOW, and money market deposit accounts, as well as certificates of deposit and individual retirement account; and safety deposit boxes. It also provides commercial real estate mortgages; construction and development, working capital, and business loans; auto, boat, and recreational vehicle loans; and residential mortgages, personal lines of credit, and home equity lines of credit. In addition, the company offers mobile and online banking, treasury management, wire transfers, cash management, merchant processing, remote deposit capture, night depositor, online bill payment, courier, retail investment, ACH originations, and other services. It operates full-service banking centers in St. Petersburg, Seminole, Pinellas Park, Clearwater, Sarasota, Tampa, Belleair Bluffs, and Bradenton, Florida. The company was formerly known as First Home Bancorp, Inc. and changed its name to BayFirst Financial Corp. in May 2021. BayFirst Financial Corp. was founded in 1999 and is headquartered in St. Petersburg, Florida.

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.