Horizon Bancorp (IN) (NASDAQ:HBNC) versus Unity Bancorp (NASDAQ:UNTY) Financial Review

Unity Bancorp (NASDAQ:UNTY) and Horizon Bancorp (IN) (NASDAQ:HBNC) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Insider & Institutional Ownership

42.3% of Unity Bancorp shares are owned by institutional investors. Comparatively, 64.5% of Horizon Bancorp (IN) shares are owned by institutional investors. 28.9% of Unity Bancorp shares are owned by insiders. Comparatively, 1.2% of Horizon Bancorp (IN) shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Unity Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 1.1%. Horizon Bancorp (IN) pays an annual dividend of $0.64 per share and has a dividend yield of 3.2%. Unity Bancorp pays out 10.8% of its earnings in the form of a dividend. Horizon Bancorp (IN) pays out -20.1% 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. Horizon Bancorp (IN) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Unity Bancorp has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Horizon Bancorp (IN) has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Unity Bancorp and Horizon Bancorp (IN), as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unity Bancorp	0	0	5	0	3.00
Horizon Bancorp (IN)	0	3	2	0	2.40

Unity Bancorp presently has a consensus price target of $65.50, indicating a potential upside of 14.86%. Horizon Bancorp (IN) has a consensus price target of $21.00, indicating a potential upside of 5.50%. Given Unity Bancorp’s stronger consensus rating and higher probable upside, equities analysts plainly believe Unity Bancorp is more favorable than Horizon Bancorp (IN).

Profitability

This table compares Unity Bancorp and Horizon Bancorp (IN)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Unity Bancorp	31.33%	16.06%	1.85%
Horizon Bancorp (IN)	-37.28%	12.41%	1.29%

Valuation & Earnings

This table compares Unity Bancorp and Horizon Bancorp (IN)”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unity Bancorp	$188.41 million	3.04	$57.95 million	$5.94	9.60
Horizon Bancorp (IN)	$405.46 million	2.52	-$150.48 million	($3.18)	-6.26

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

Summary

Unity Bancorp beats Horizon Bancorp (IN) on 12 of the 17 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 Horizon Bancorp (IN)

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that engages in the provision of commercial and retail banking services. The company offers checking, saving, money market, certificate of deposits, individual retirement accounts, and time deposits, as well as non-interest- and interest-bearing demand deposits. It also provides commercial, residential real estate, mortgage, home equity, auto, personal, business, agricultural, and SBA loans, as well as credit cards. In addition, the company offers corporate and individual trust and agency, investment management, and real estate investment trust services; debit cards; treasury management; online and mobile banking; wealth, retirement, and estate and trust services; and sells various insurance products. It operates through full-service offices in northern and central Indiana and southern and central Michigan. Horizon Bancorp, Inc. was founded in 1873 and is headquartered in Michigan City, Indiana.