Contrasting Wells Fargo & Company (NYSE:WFC) and Avidbank (NASDAQ:AVBH)

Avidbank (NASDAQ:AVBH) and Wells Fargo & Company (NYSE:WFC) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of recent ratings for Avidbank and Wells Fargo & Company, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avidbank	0	1	3	0	2.75
Wells Fargo & Company	0	10	14	2	2.69

Avidbank currently has a consensus price target of $35.33, suggesting a potential upside of 12.53%. Wells Fargo & Company has a consensus price target of $98.61, suggesting a potential upside of 14.52%. Given Wells Fargo & Company’s higher possible upside, analysts plainly believe Wells Fargo & Company is more favorable than Avidbank.

Profitability

This table compares Avidbank and Wells Fargo & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avidbank	-8.69%	10.85%	1.21%
Wells Fargo & Company	17.55%	13.85%	1.06%

Earnings and Valuation

This table compares Avidbank and Wells Fargo & Company”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avidbank	$151.76 million	2.27	-$19.55 million	($1.92)	-16.35
Wells Fargo & Company	$123.53 billion	2.11	$21.34 billion	$6.88	12.51

Wells Fargo & Company has higher revenue and earnings than Avidbank. Avidbank is trading at a lower price-to-earnings ratio than Wells Fargo & Company, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Avidbank has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Wells Fargo & Company has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Insider and Institutional Ownership

15.9% of Avidbank shares are owned by institutional investors. Comparatively, 75.9% of Wells Fargo & Company shares are owned by institutional investors. 9.6% of Avidbank shares are owned by company insiders. Comparatively, 0.1% of Wells Fargo & Company shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Wells Fargo & Company beats Avidbank on 11 of the 15 factors compared between the two stocks.

About Avidbank

Avidbank Holdings, Inc. operates as a bank holding company for Avidbank that provides financial products and services to small and middle-market businesses, professionals, and individuals in the Santa Clara, San Mateo, and San Francisco counties. It offers business and personal deposit products, such as checking, money market, and savings accounts; and certificates of deposit. The company also provides personal lending products include secured and unsecured lines of credit, home equity lines of credit, remodel and new home construction loans, and term loans; corporate banking comprises working capital lines of credit, equipment loans, acquisition financing, shareholder buyouts, ESOP loans, and owner-occupied real estate loans; and commercial real estate lending, such as permanent loans and bridge financing products. In addition, it offers construction lending products, including land acquisition loans, pre-development loans, construction spec SFD, owner-occupied SFD, condominiums, subdivision, unsecured business lines, real estate bridge loans, and RLOC – real estate secured loans. Further, the company provides various financing solutions, such as structured finance, venture lending, asset-based lending, and sponsor finance. Additionally, it offers various services, such as automated clearing house payments and collections, bill pay, wire transfer, lockbox, merchant, remote deposit capture, ATM/debit cards, credit cards, business courier, cash management, and notary services, as well as online and mobile banking. The company was formerly known as Peninsula Bank Holding Co. and changed its name to Avidbank Holdings, Inc. in August 2011. Avidbank Holdings, Inc. was founded in 2003 and is headquartered in San Jose, California.

About Wells Fargo & Company

Wells Fargo & Co. is a diversified and community-based financial services company, which engages in the provision of banking, insurance, investments, mortgage, and consumer and commercial finance products and services. It operates through the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. The Consumer Banking and Lending segment offers consumer and small business banking, home lending, credit cards, auto, and personal lending. The Commercial Banking segment provides banking and credit products across industry sectors and municipalities, secured lending and lease products, and treasury management. The Corporate and Investment Banking segment is composed of corporate banking, investment banking, treasury management, commercial real estate lending and servicing, and equity and fixed income solutions, as well as sales, trading, and research capabilities. The Wealth and Investment Management segment refers to personalized wealth management, brokerage, financial planning, lending, private banking, trust, and fiduciary products and services. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.