Financial Contrast: Regions Financial (NYSE:RF) & Investar (NASDAQ:ISTR)

Regions Financial (NYSE:RF) and Investar (NASDAQ:ISTR) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Earnings & Valuation

This table compares Regions Financial and Investar”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Regions Financial	$9.37 billion	2.57	$1.89 billion	$2.27	12.11
Investar	$158.07 million	1.71	$20.25 million	$2.24	12.33

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

Dividends

Regions Financial pays an annual dividend of $1.06 per share and has a dividend yield of 3.9%. Investar pays an annual dividend of $0.44 per share and has a dividend yield of 1.6%. Regions Financial pays out 46.7% 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. Regions Financial has increased its dividend for 12 consecutive years and Investar has increased its dividend for 10 consecutive years. Regions Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for Regions Financial and Investar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Regions Financial	1	7	8	0	2.44
Investar	0	0	2	1	3.33

Regions Financial presently has a consensus target price of $27.93, indicating a potential upside of 1.57%. Investar has a consensus target price of $29.00, indicating a potential upside of 5.03%. Given Investar’s stronger consensus rating and higher probable upside, analysts plainly believe Investar is more favorable than Regions Financial.

Profitability

This table compares Regions Financial and Investar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Regions Financial	22.49%	13.05%	1.40%
Investar	14.87%	9.38%	0.86%

Insider & Institutional Ownership

79.4% of Regions Financial shares are held by institutional investors. Comparatively, 50.2% of Investar shares are held by institutional investors. 0.3% of Regions Financial shares are held by company insiders. Comparatively, 8.8% of Investar shares are held by company 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.

Volatility and Risk

Regions Financial has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Investar has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.

Summary

Regions Financial beats Investar on 12 of the 18 factors compared between the two stocks.

About Regions Financial

Regions Financial Corporation, a financial holding company, provides banking and bank-related services to individual and corporate customers. It operates through three segments: Corporate Bank, Consumer Bank, and Wealth Management. The Corporate Bank segment offers commercial banking services, such as commercial and industrial, commercial real estate, and investor real estate lending; equipment lease financing; deposit products; and securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition, and other advisory services. It serves corporate, middle market, and commercial real estate developers and investors. The Consumer Bank segment provides consumer banking products and services related to residential first mortgages, home equity lines and loans, consumer credit cards, and other consumer loans, as well as deposits. The Wealth Management segment offers credit related products, and retirement and savings solutions; and trust and investment management, asset management, and estate planning services to individuals, businesses, governmental institutions, and non-profit entities. It also provides investment and insurance products; low-income housing tax credit corporate fund syndication services; and other specialty financing services. The company was founded in 1971 and is headquartered in Birmingham, Alabama.

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.