Investar (NASDAQ:ISTR) vs. Washington Trust Bancorp (NASDAQ:WASH) Critical Contrast

Washington Trust Bancorp (NASDAQ:WASH) and Investar (NASDAQ:ISTR) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Washington Trust Bancorp and Investar, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Washington Trust Bancorp	0	3	1	0	2.25
Investar	0	2	1	0	2.33

Washington Trust Bancorp currently has a consensus price target of $35.50, suggesting a potential downside of 11.82%. Investar has a consensus price target of $31.50, suggesting a potential upside of 1.29%. Given Investar’s stronger consensus rating and higher probable upside, analysts plainly believe Investar is more favorable than Washington Trust Bancorp.

Volatility and Risk

Washington Trust Bancorp has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Investar has a beta of 0.45, meaning that its share price is 55% less volatile than the S&P 500.

Institutional and Insider Ownership

65.8% of Washington Trust Bancorp shares are held by institutional investors. Comparatively, 50.2% of Investar shares are held by institutional investors. 1.3% of Washington Trust Bancorp shares are held by insiders. Comparatively, 10.6% of Investar shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Washington Trust Bancorp and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Washington Trust Bancorp	14.50%	10.18%	0.84%
Investar	17.55%	11.65%	1.14%

Valuation & Earnings

This table compares Washington Trust Bancorp and Investar”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Washington Trust Bancorp	$393.95 million	1.95	$52.24 million	$2.88	13.98
Investar	$153.48 million	2.79	$22.90 million	$2.43	12.80

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

Dividends

Washington Trust Bancorp pays an annual dividend of $2.24 per share and has a dividend yield of 5.6%. Investar pays an annual dividend of $0.48 per share and has a dividend yield of 1.5%. Washington Trust Bancorp pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Investar pays out 19.8% of its earnings in the form of a dividend. Investar has raised its dividend for 10 consecutive years.

Summary

Investar beats Washington Trust Bancorp on 9 of the 16 factors compared between the two stocks.

About Washington Trust Bancorp

Washington Trust Bancorp, Inc. operates as the bank holding company for The Washington Trust Company, of Westerly that provides various banking and financial services to individuals and businesses. The company operates in two segments, Commercial Banking and Wealth Management Services. The Commercial Banking segment offers deposit accounts, including interest-bearing and noninterest-bearing demand deposits, NOW and savings accounts, money market and retirement deposit accounts, and time deposits; various commercial and retail lending products, such as commercial real estate loans, including commercial mortgages, and construction and development loans; commercial and industrial loans comprising working capital, equipment financing, and financing for other business-related purposes; residential real estate loans that consist of mortgage and homeowner construction loans; and consumer loans comprising home equity loans and lines of credit, personal installment loans, and loans to individuals secured by general aviation aircraft. This segment also provides debit cards; automated teller machines (ATMs); telephone banking, internet banking, mobile banking, remote deposit capture, and other cash management services; and investment portfolio and wholesale funding services. The Wealth Management Services segment offers investment management; financial planning; personal trust and estate services, such as trustee, personal representative, custodian, and guardian; and settlement of decedents’ estates, as well as institutional trust services comprising custody and fiduciary services for personal and institutional clients. Washington Trust Bancorp, Inc. was founded in 1800 and is headquartered in Westerly, Rhode Island.

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.