Critical Analysis: Pathfinder Bancorp (NASDAQ:PBHC) & Investar (NASDAQ:ISTR)

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

Institutional & Insider Ownership

26.7% of Pathfinder Bancorp shares are held by institutional investors. Comparatively, 50.2% of Investar shares are held by institutional investors. 15.7% of Pathfinder Bancorp shares are held by company insiders. Comparatively, 10.6% of Investar shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Pathfinder Bancorp and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pathfinder Bancorp	0.13%	0.08%	0.01%
Investar	18.81%	12.62%	1.25%

Analyst Recommendations

This is a breakdown of current ratings for Pathfinder Bancorp and Investar, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pathfinder Bancorp	0	1	0	0	2.00
Investar	0	2	1	0	2.33

Investar has a consensus target price of $31.00, indicating a potential upside of 11.55%. Given Investar’s stronger consensus rating and higher possible upside, analysts plainly believe Investar is more favorable than Pathfinder Bancorp.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pathfinder Bancorp	$79.15 million	1.03	-$1.93 million	$0.01	1,671.00
Investar	$153.48 million	2.50	$22.90 million	$2.63	10.57

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

Volatility & Risk

Pathfinder Bancorp has a beta of 0.11, suggesting that its stock price is 89% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Dividends

Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. Investar pays an annual dividend of $0.48 per share and has a dividend yield of 1.7%. Pathfinder Bancorp pays out 4,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Investar pays out 18.3% of its earnings in the form of a dividend. Pathfinder Bancorp has raised its dividend for 1 consecutive years and Investar has raised its dividend for 10 consecutive years.

Summary

Investar beats Pathfinder Bancorp on 14 of the 17 factors compared between the two stocks.

About Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.

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.