Analyzing Byline Bancorp (NYSE:BY) and National Bankshares (NASDAQ:NKSH)

Byline Bancorp (NYSE:BY) and National Bankshares (NASDAQ:NKSH) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, dividends, institutional ownership, profitability and earnings.

Earnings & Valuation

This table compares Byline Bancorp and National Bankshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Byline Bancorp	$633.15 million	2.63	$130.05 million	$3.31	11.11
National Bankshares	$60.48 million	4.56	$15.83 million	$3.18	13.61

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

Institutional & Insider Ownership

67.7% of Byline Bancorp shares are held by institutional investors. Comparatively, 29.7% of National Bankshares shares are held by institutional investors. 29.1% of Byline Bancorp shares are held by company insiders. Comparatively, 3.3% of National Bankshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Byline Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.5%. National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 3.5%. Byline Bancorp pays out 16.9% of its earnings in the form of a dividend. National Bankshares pays out 47.2% 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. Byline Bancorp has increased its dividend for 1 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations for Byline Bancorp and National Bankshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Byline Bancorp	0	3	3	0	2.50
National Bankshares	0	1	1	0	2.50

Byline Bancorp presently has a consensus target price of $43.00, suggesting a potential upside of 16.90%. Given Byline Bancorp’s higher possible upside, analysts clearly believe Byline Bancorp is more favorable than National Bankshares.

Volatility and Risk

Byline Bancorp has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, National Bankshares has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Profitability

This table compares Byline Bancorp and National Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Byline Bancorp	23.36%	11.84%	1.53%
National Bankshares	23.22%	10.66%	1.09%

Summary

Byline Bancorp beats National Bankshares on 13 of the 16 factors compared between the two stocks.

About Byline Bancorp

Byline Bancorp, Inc. operates as the bank holding company for Byline Bank that provides various banking products and services for small and medium sized businesses, commercial real estate and financial sponsors, and consumers in the United States. It offers various retail deposit products, including non-interest-bearing accounts, money market demand accounts, savings accounts, interest-bearing checking accounts, and time deposits; ATM and debit cards; and online, mobile, and text banking services, as well as commercial deposits. The company also provides term loans, revolving lines of credit, and construction financing services; senior secured financing solutions to private equity backed lower middle market companies; small business administration and united states department of agriculture loans; and treasury management products and services. In addition, it offers financing solutions for equipment vendors and their end users; syndication services; and investment, trust, and wealth management services that include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services for foundations and endowments, and high net worth individuals. The company was formerly known as Metropolitan Bank Group, Inc. and changed its name to Byline Bancorp, Inc. in 2015. Byline Bancorp, Inc. was founded in 1914 and is headquartered in Chicago, Illinois.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.