Head to Head Review: BankUnited (NYSE:BKU) versus Unity Bancorp (NASDAQ:UNTY)

Unity Bancorp (NASDAQ:UNTY) and BankUnited (NYSE:BKU) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Dividends

Unity Bancorp pays an annual dividend of $0.68 per share and has a dividend yield of 1.2%. BankUnited pays an annual dividend of $1.32 per share and has a dividend yield of 3.1%. Unity Bancorp pays out 11.8% of its earnings in the form of a dividend. BankUnited pays out 36.2% 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. Unity Bancorp has raised its dividend for 12 consecutive years and BankUnited has raised its dividend for 4 consecutive years.

Valuation and Earnings

This table compares Unity Bancorp and BankUnited”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unity Bancorp	$134.79 million	4.12	$57.95 million	$5.75	9.61
BankUnited	$1.12 billion	2.73	$268.35 million	$3.65	11.76

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

Institutional & Insider Ownership

42.3% of Unity Bancorp shares are owned by institutional investors. Comparatively, 99.7% of BankUnited shares are owned by institutional investors. 28.9% of Unity Bancorp shares are owned by insiders. Comparatively, 1.0% of BankUnited shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Unity Bancorp and BankUnited, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unity Bancorp	0	0	5	1	3.17
BankUnited	3	5	6	0	2.21

Unity Bancorp currently has a consensus target price of $65.50, suggesting a potential upside of 18.59%. BankUnited has a consensus target price of $49.91, suggesting a potential upside of 16.24%. Given Unity Bancorp’s stronger consensus rating and higher possible upside, research analysts plainly believe Unity Bancorp is more favorable than BankUnited.

Profitability

This table compares Unity Bancorp and BankUnited’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Unity Bancorp	30.26%	16.10%	1.88%
BankUnited	14.76%	9.13%	0.79%

Volatility & Risk

Unity Bancorp has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, BankUnited has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Summary

Unity Bancorp beats BankUnited on 11 of the 18 factors compared between the two stocks.

About Unity Bancorp

Unity Bancorp, Inc. operates as a bank holding company for Unity Bank that provides range of commercial and retail banking services to individuals, small and medium sized businesses, and professional communities. It offers personal and business checking accounts, time deposits, money market accounts, savings accounts, and retirement accounts, as well as noninterest and interest-bearing demand deposits. The company also provides small business administration loans; commercial loans; and residential mortgage and consumer loans, including residential real estate, home equity lines and loans, and residential construction lines, as well as personal loans. In addition, it offers credit and debit cards, wire transfer, safe deposit box, automated teller, and internet and mobile banking services; and automated clearing house origination and remote deposit capture services. Unity Bancorp, Inc. was incorporated in 1991 and is headquartered in Clinton, New Jersey.

About BankUnited

BankUnited, Inc. operates as the bank holding company for BankUnited, a national banking association that provides a range of banking services in the United States. The company offers deposit products, such as checking, money market deposit, and savings accounts; certificates of deposit; and treasury, commercial payment, and cash management services. Its loans portfolio includes commercial loans, including equipment loans, secured and unsecured lines of credit, formula-based lines of credit, owner-occupied commercial real estate term loans and lines of credit, mortgage warehouse lines, subscription finance facilities, letters of credit, commercial credit cards, small business administration and U.S. department of agriculture product offerings, export-import bank financing products, trade finance, and business acquisition finance credit facilities; commercial real estate loans; residential mortgages; and other consumer loans. The company offers online, mobile, and telephone banking services. It operates through a network of banking centers located in Florida counties and the New York metropolitan area, as well as Dallas, Texas. The company was formerly known as BU Financial Corporation. BankUnited, Inc. was incorporated in 2009 and is headquartered in Miami Lakes, Florida.