Contrasting Investar (NASDAQ:ISTR) and Southern First Bancshares (NASDAQ:SFST)

Southern First Bancshares (NASDAQ:SFST) and Investar (NASDAQ:ISTR) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Profitability

This table compares Southern First Bancshares and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern First Bancshares	15.21%	9.81%	0.80%
Investar	16.53%	11.83%	1.12%

Valuation and Earnings

This table compares Southern First Bancshares and Investar”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern First Bancshares	$125.39 million	3.74	$30.37 million	$4.28	13.27
Investar	$153.48 million	2.53	$22.90 million	$2.28	12.38

Southern First Bancshares has higher earnings, but lower revenue than Investar. Investar is trading at a lower price-to-earnings ratio than Southern First Bancshares, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Southern First Bancshares has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Southern First Bancshares and Investar, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern First Bancshares	0	1	2	0	2.67
Investar	0	3	0	0	2.00

Southern First Bancshares presently has a consensus target price of $64.00, suggesting a potential upside of 12.66%. Investar has a consensus target price of $31.50, suggesting a potential upside of 11.62%. Given Southern First Bancshares’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Southern First Bancshares is more favorable than Investar.

Institutional and Insider Ownership

75.0% of Southern First Bancshares shares are owned by institutional investors. Comparatively, 50.2% of Investar shares are owned by institutional investors. 6.9% of Southern First Bancshares shares are owned by insiders. Comparatively, 10.6% of Investar shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Southern First Bancshares beats Investar on 9 of the 14 factors compared between the two stocks.

About Southern First Bancshares

Southern First Bancshares, Inc. operates as the bank holding company for Southern First Bank that provides commercial, consumer, and mortgage loans to the general public in South Carolina, North Carolina, and Georgia. The company accepts various deposit products that include checking accounts, commercial checking accounts, and savings accounts, as well as other time deposits, including daily money market accounts and long-term certificates of deposit. Its loan portfolio comprises commercial real estate loans; construction real estate loans; commercial business loans for various lines of businesses, such as the manufacturing, service industry, and professional service areas; consumer real estate and home equity loans; and other consumer loans, including secured and unsecured installment loans and revolving lines of credit. In addition, the company provides other bank services, such as internet banking, cash management, safe deposit boxes, direct deposit, automatic drafts, bill payment, and mobile banking services. Southern First Bancshares, Inc. was incorporated in 1999 and is headquartered in Greenville, South Carolina.

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.