Atlantic Capital Bancshares (NASDAQ: ACBI) and Flagstar Bancorp (NYSE:FBC) are both small-cap financials companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, risk, valuation, profitability and institutional ownership.

Insider & Institutional Ownership

78.3% of Atlantic Capital Bancshares shares are held by institutional investors. Comparatively, 96.3% of Flagstar Bancorp shares are held by institutional investors. 4.6% of Atlantic Capital Bancshares shares are held by insiders. Comparatively, 63.0% of Flagstar Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Atlantic Capital Bancshares and Flagstar Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlantic Capital Bancshares 0 3 1 0 2.25
Flagstar Bancorp 0 3 5 0 2.63

Atlantic Capital Bancshares presently has a consensus price target of $21.50, indicating a potential upside of 25.36%. Flagstar Bancorp has a consensus price target of $35.25, indicating a potential upside of 7.05%. Given Atlantic Capital Bancshares’ higher possible upside, research analysts plainly believe Atlantic Capital Bancshares is more favorable than Flagstar Bancorp.

Volatility and Risk

Atlantic Capital Bancshares has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, Flagstar Bancorp has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500.

Profitability

This table compares Atlantic Capital Bancshares and Flagstar Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atlantic Capital Bancshares 16.79% 5.51% 0.63%
Flagstar Bancorp 16.52% 10.15% 0.92%

Earnings and Valuation

This table compares Atlantic Capital Bancshares and Flagstar Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atlantic Capital Bancshares $90.67 million 4.85 $13.60 million $0.53 32.36
Flagstar Bancorp $783.00 million 2.40 $149.76 million $2.62 12.57

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

Summary

Flagstar Bancorp beats Atlantic Capital Bancshares on 9 of the 14 factors compared between the two stocks.

About Atlantic Capital Bancshares

Atlantic Capital Bancshares, Inc. is the bank holding company for Atlantic Capital Bank (the Bank). The Bank operates as a commercial bank. The Bank provides an array of credit, treasury management and deposit products and services to growth businesses, middle market corporations, commercial real estate developers and investors, and private clients. Its wealth management division offers financial planning, trust administration, investment management, brokerage and estate planning services. It also provides selected capital markets, mortgage banking, and electronic banking services to its corporate, business and individual clients. Its private banking credit products include loans to individuals for personal and investment purposes, such as secured installment and term loans, and home equity lines of credit. Its specialty corporate financial services include payments industry banking, financial institutions banking, capital markets services and specialty commercial lending.

About Flagstar Bancorp

Flagstar Bancorp, Inc. is a savings and loan holding company. The Company’s business is primarily conducted through its principal subsidiary, Flagstar Bank, FSB. It operates through four segments: Community Banking, Mortgage Originations, Mortgage Servicing, and Other. Through Mortgage Originations segment, it originates, acquires and sells one- to four-family residential mortgage loans. The Mortgage Servicing segment includes services and subservices mortgage loans, on a fee basis, for others. The Community Banking segment originates loans, provides deposits and fee based services to consumer, business and mortgage lending customers through its Branch Banking, Business and Commercial Banking, Government Banking, Warehouse Lending and Held-for-Investment Portfolio groups. It offers checking accounts, savings accounts, money market accounts, certificates of deposit and others. Other financial services include lines of credit, revolving credit, inventory and accounts receivable.

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