Bay Banks of Virginia (NASDAQ: GBNK) and Guaranty Bancorp (NASDAQ:GBNK) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Institutional and Insider Ownership

10.8% of Bay Banks of Virginia shares are held by institutional investors. Comparatively, 73.5% of Guaranty Bancorp shares are held by institutional investors. 7.3% of Bay Banks of Virginia shares are held by company insiders. Comparatively, 8.4% of Guaranty Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Bay Banks of Virginia pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. Guaranty Bancorp pays an annual dividend of $0.65 per share and has a dividend yield of 2.2%. Bay Banks of Virginia pays out 50.0% of its earnings in the form of a dividend. Guaranty Bancorp pays out 42.5% 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. Guaranty Bancorp has increased its dividend for 4 consecutive years. Guaranty Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Bay Banks of Virginia and Guaranty Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bay Banks of Virginia 0 0 0 0 N/A
Guaranty Bancorp 0 2 1 0 2.33

Guaranty Bancorp has a consensus target price of $34.17, indicating a potential upside of 13.13%. Given Guaranty Bancorp’s higher probable upside, analysts plainly believe Guaranty Bancorp is more favorable than Bay Banks of Virginia.

Profitability

This table compares Bay Banks of Virginia and Guaranty Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bay Banks of Virginia 1.65% 2.37% 0.28%
Guaranty Bancorp 26.57% 12.61% 1.38%

Volatility and Risk

Bay Banks of Virginia has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, Guaranty Bancorp has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Earnings and Valuation

This table compares Bay Banks of Virginia and Guaranty Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bay Banks of Virginia $37.38 million 3.36 -$1.27 million $0.16 59.38
Guaranty Bancorp $159.75 million 5.54 $38.62 million $1.53 19.74

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

Summary

Guaranty Bancorp beats Bay Banks of Virginia on 15 of the 16 factors compared between the two stocks.

About Bay Banks of Virginia

Bay Banks of Virginia, Inc., through its subsidiaries, provides various banking products and services to businesses, professionals, and consumers in Virginia. The company accepts checking accounts, savings accounts, money market accounts, cash management accounts, certificates of deposit, and individual retirement accounts. Its loan products include commercial and industrial loans, such as small business loans, asset based loans, and other secured and unsecured loans and lines of credit; residential and commercial mortgages; home equity loans; consumer installment loans; and consumer loans comprising automobile and boat financing, home improvement loans, and unsecured personal loans. It also offers credit cards; investment accounts; and insurance, online banking, telephone banking, mobile banking, analysis checking, cash management deposit, wire, direct deposit payroll, and remote deposit services, as well as a line of commercial lending options. In addition, the company offers management services, including estate planning and settlement, revocable and irrevocable living trusts, testamentary trusts, custodial accounts, investment management accounts, and managed and self-directed rollover individual retirement accounts for personal and corporate trusts. As of July 13, 2018, it operated 19 banking offices; and a loan production office located throughout the Richmond market area, the Northern Neck region, Tri-Cities area of Petersburg, Hopewell and Colonial Heights, Middlesex County, and Hampton Roads region. Bay Banks of Virginia, Inc. was founded in 1930 and is headquartered in Richmond, Virginia.

About Guaranty Bancorp

Guaranty Bancorp operates as the bank holding company for Guaranty Bank and Trust Company that provides various banking and other financial services to consumers, and small to medium-sized businesses. The company accepts deposit products, such as demand, interest-bearing demand, NOW, money market, IRA, and time deposits, and savings accounts, as well as certificates of deposit. It also offers loan products, including commercial, commercial and residential real estate, construction, and small business administration loans, as well as installment loans to individuals and other consumer loans that include overdraft protection, lines of credit, and other consumer loans. In addition, the company provides wealth management services comprising private banking, investment management, and trust services. As of December 31, 2017, it operated 32 branches located in Colorado's Front Range consisting of the Denver metropolitan area; and an investment management firms. The company was formerly known as Centennial Bank Holdings, Inc. and changed its name to Guaranty Bancorp in 2008. Guaranty Bancorp was incorporated in 2004 and is headquartered in Denver, Colorado.

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