Sun Bancorp (NASDAQ: SNBC) and Capstar Financial Holdings (NASDAQ:CSTR) are both small-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Earnings & Valuation

This table compares Sun Bancorp and Capstar Financial Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sun Bancorp $83.00 million 5.68 $61.41 million $3.23 7.65
Capstar Financial Holdings $56.48 million 4.09 $9.09 million $0.35 58.09

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

Risk & Volatility

Sun Bancorp has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500. Comparatively, Capstar Financial Holdings has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500.

Profitability

This table compares Sun Bancorp and Capstar Financial Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sun Bancorp 14.52% 3.36% 0.50%
Capstar Financial Holdings 7.05% 9.27% 0.95%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Sun Bancorp and Capstar Financial Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Bancorp 0 0 2 0 3.00
Capstar Financial Holdings 0 4 0 0 2.00

Sun Bancorp presently has a consensus target price of $27.25, indicating a potential upside of 10.32%. Capstar Financial Holdings has a consensus target price of $18.00, indicating a potential downside of 11.46%. Given Sun Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Sun Bancorp is more favorable than Capstar Financial Holdings.

Dividends

Sun Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.2%. Capstar Financial Holdings does not pay a dividend. Sun Bancorp pays out 1.2% of its earnings in the form of a dividend.

Institutional & Insider Ownership

70.0% of Sun Bancorp shares are held by institutional investors. Comparatively, 34.0% of Capstar Financial Holdings shares are held by institutional investors. 12.5% of Sun Bancorp shares are held by company insiders. Comparatively, 19.3% of Capstar Financial Holdings shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Sun Bancorp beats Capstar Financial Holdings on 10 of the 16 factors compared between the two stocks.

About Sun Bancorp

Sun Bancorp, Inc. is a bank holding company. The Company’s principal subsidiary is Sun National Bank (the Bank). Through the Bank, the Company provides an array of community banking services to consumers, small businesses and mid-size companies. The Company’s lending services to businesses include term loans, lines of credit and commercial mortgages. The Company’s commercial deposit services include business checking and money market accounts, and cash management solutions, such as online banking, electronic bill payment and wire transfer services, lockbox services, remote deposit and controlled disbursement services. The Company’s lending services to consumers consist primarily of lines of credit of overdraft sweeps. The Company’s consumer deposit services include checking accounts, savings accounts, money market accounts, certificates of deposit and individual retirement accounts.

About Capstar Financial Holdings

CapStar Financial Holdings, Inc. is a bank holding company. The Company operates primarily through its subsidiary, CapStar Bank. CapStar Bank is a commercial bank. The Company’s lines of business include commercial and industrial, commercial real estate, healthcare, correspondent banking, personal and private banking and wealth management, and mortgage banking. Its products and services include commercial and industrial loans to small and medium sized businesses, with a particular focus on businesses operating in the healthcare industry; commercial real estate loans; private banking and wealth management services for the owners and operators of business clients and other high net worth individuals, and correspondent banking services. As of June 30, 2016, the Company had seven locations, five of which are retail bank branches and two of which are mortgage origination offices.

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