Analyzing First Business Financial Services (NASDAQ:FBIZ) and Oak Valley Bancorp (NASDAQ:OVLY)

Oak Valley Bancorp (NASDAQ:OVLY) and First Business Financial Services (NASDAQ:FBIZ) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

Analyst Recommendations

This is a summary of recent ratings for Oak Valley Bancorp and First Business Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oak Valley Bancorp	0	0	1	0	3.00
First Business Financial Services	0	0	4	1	3.20

First Business Financial Services has a consensus target price of $78.25, suggesting a potential upside of 10.96%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe First Business Financial Services is more favorable than Oak Valley Bancorp.

Earnings and Valuation

This table compares Oak Valley Bancorp and First Business Financial Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oak Valley Bancorp	$95.04 million	3.00	$23.91 million	$2.82	12.04
First Business Financial Services	$279.25 million	2.11	$50.32 million	$6.56	10.75

First Business Financial Services has higher revenue and earnings than Oak Valley Bancorp. First Business Financial Services is trading at a lower price-to-earnings ratio than Oak Valley Bancorp, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

30.9% of Oak Valley Bancorp shares are owned by institutional investors. Comparatively, 60.1% of First Business Financial Services shares are owned by institutional investors. 13.9% of Oak Valley Bancorp shares are owned by company insiders. Comparatively, 5.0% of First Business Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Oak Valley Bancorp pays an annual dividend of $0.75 per share and has a dividend yield of 2.2%. First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 1.9%. Oak Valley Bancorp pays out 26.6% of its earnings in the form of a dividend. First Business Financial Services pays out 20.7% 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. Oak Valley Bancorp has increased its dividend for 11 consecutive years and First Business Financial Services has increased its dividend for 13 consecutive years.

Volatility & Risk

Oak Valley Bancorp has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Profitability

This table compares Oak Valley Bancorp and First Business Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oak Valley Bancorp	24.05%	11.31%	1.17%
First Business Financial Services	19.28%	14.92%	1.29%

Summary

First Business Financial Services beats Oak Valley Bancorp on 13 of the 18 factors compared between the two stocks.

About Oak Valley Bancorp

Oak Valley Bancorp operates as the bank holding company for Oak Valley Community Bank that provides a range of commercial banking services to individuals and small to medium-sized businesses in the Central Valley and the Eastern Sierras. The company's deposits products include checking and savings, money market, health savings, and individual retirement accounts, as well as certificates of deposit. It also offers commercial real estate loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including automobile loans, home mortgages, credit lines, and other personal loans. In addition, the company provides online and mobile banking, remote deposit capture, merchant, night depository, extended hours, wire transfer of funds, note collection services, and automated teller machines. The company was incorporated in 1990 and is headquartered in Oakdale, California.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.