Head to Head Comparison: Burke & Herbert Financial Services (NASDAQ:BHRB) and Bank of the James Financial Group (NASDAQ:BOTJ)

Bank of the James Financial Group (NASDAQ:BOTJ) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, risk and dividends.

Insider and Institutional Ownership

18.5% of Bank of the James Financial Group shares are held by institutional investors. 11.9% of Bank of the James Financial Group shares are held by insiders. Comparatively, 12.0% of Burke & Herbert Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

Bank of the James Financial Group has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500. Comparatively, Burke & Herbert Financial Services has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares Bank of the James Financial Group and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of the James Financial Group	17.72%	14.30%	1.10%
Burke & Herbert Financial Services	18.86%	13.66%	1.46%

Valuation & Earnings

This table compares Bank of the James Financial Group and Burke & Herbert Financial Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of the James Financial Group	$62.51 million	1.99	$9.02 million	$2.53	10.81
Burke & Herbert Financial Services	$491.11 million	2.85	$117.31 million	$6.24	11.10

Burke & Herbert Financial Services has higher revenue and earnings than Bank of the James Financial Group. Bank of the James Financial Group is trading at a lower price-to-earnings ratio than Burke & Herbert Financial Services, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Bank of the James Financial Group and Burke & Herbert Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of the James Financial Group	0	0	1	0	3.00
Burke & Herbert Financial Services	0	3	2	1	2.67

Burke & Herbert Financial Services has a consensus price target of $75.25, indicating a potential upside of 8.62%. Given Burke & Herbert Financial Services’ higher probable upside, analysts clearly believe Burke & Herbert Financial Services is more favorable than Bank of the James Financial Group.

Dividends

Bank of the James Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.2%. Bank of the James Financial Group pays out 15.8% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 35.3% 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. Bank of the James Financial Group has raised its dividend for 5 consecutive years and Burke & Herbert Financial Services has raised its dividend for 1 consecutive years.

Summary

Burke & Herbert Financial Services beats Bank of the James Financial Group on 13 of the 18 factors compared between the two stocks.

About Bank of the James Financial Group

Bank of the James Financial Group, Inc. operates as the bank holding company for Bank of the James that provides general retail and commercial banking services to individuals, businesses, associations and organizations, and governmental authorities in Virginia, the United States. It offers checking, savings, individual retirement, and health care saving accounts, as well as other time deposits, including money market accounts and certificates of deposit. The company also provides loans to small- and medium-sized businesses for the purchases of equipment, facilities upgrades, inventory acquisition, and various working capital purposes; commercial and residential construction and development loans; commercial real estate mortgage loans; residential mortgage loans; and secured and unsecured consumer loans, such as lines of credit and overdraft lines of credit, as well as personal, automobile, installment, demand, and home equity loans for personal, family, or household purposes. In addition, it offers other banking services, including safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, treasury management, and credit card merchant services. Further, the company provides mortgage banking; investment advisory services; securities brokerage and investment services; and telephone and internet banking services comprising online bill pay, as well as acts as an agent for insurance and annuity products. The company was founded in 1999 and is headquartered in Lynchburg, Virginia.

About Burke & Herbert Financial Services

Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.