Investar (NASDAQ:ISTR) versus Pinnacle Bankshares (OTCMKTS:PPBN) Critical Contrast

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

Profitability

This table compares Pinnacle Bankshares and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle Bankshares	18.14%	12.94%	1.03%
Investar	14.87%	9.38%	0.86%

Dividends

Pinnacle Bankshares pays an annual dividend of $1.12 per share and has a dividend yield of 2.5%. Investar pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. Pinnacle Bankshares pays out 23.1% of its earnings in the form of a dividend. Investar pays out 19.6% 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. Investar has increased its dividend for 10 consecutive years.

Insider and Institutional Ownership

3.8% of Pinnacle Bankshares shares are owned by institutional investors. Comparatively, 50.2% of Investar shares are owned by institutional investors. 6.5% of Pinnacle Bankshares shares are owned by company insiders. Comparatively, 8.8% of Investar shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for Pinnacle Bankshares and Investar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Bankshares	0	0	0	0	0.00
Investar	0	1	2	0	2.67

Investar has a consensus target price of $29.00, suggesting a potential upside of 6.70%. Given Investar’s stronger consensus rating and higher possible upside, analysts clearly believe Investar is more favorable than Pinnacle Bankshares.

Earnings & Valuation

This table compares Pinnacle Bankshares and Investar”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Bankshares	$55.62 million	1.76	$9.18 million	$4.84	9.09
Investar	$158.07 million	1.69	$20.25 million	$2.24	12.13

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

Volatility & Risk

Pinnacle Bankshares has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Summary

Investar beats Pinnacle Bankshares on 11 of the 17 factors compared between the two stocks.

About Pinnacle Bankshares

Pinnacle Bankshares Corporation operates as the bank holding company for First National Bank that provides a range of commercial and retail banking products and services. The company accepts checking accounts, savings and time deposits, individual retirement accounts, certificates of deposit, and money market accounts. Its loan products include residential and commercial mortgage loans, home equity loans, consumer installment loans, agricultural loans, investment loans, small business loans, commercial lines of credit, and letters of credit. The company also provides credit cards; insurance products, including property and casualty, life, and health; investment and annuity products; and overdraft protection, merchant bankcard processing, cash management, remote deposit capture, night drop, safe deposit boxes, and notary services, as well as telephone, mobile, and online banking services. It operates branches in Amherst County, Bedford County, Campbell County, Pittsylvania County; and the city of Danville, Lynchburg and Charlottesville. The company was founded in 1908 and is headquartered in Altavista, Virginia.

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.