First Bank (NASDAQ: FRBA) and Walker & Dunlop (NYSE:WD) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, valuation, institutional ownership, profitability, earnings and dividends.

Profitability

This table compares First Bank and Walker & Dunlop’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Bank 17.19% N/A N/A
Walker & Dunlop 21.91% 22.86% 5.38%

Risk & Volatility

First Bank has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Walker & Dunlop has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.

Institutional & Insider Ownership

43.3% of First Bank shares are held by institutional investors. Comparatively, 77.3% of Walker & Dunlop shares are held by institutional investors. 11.7% of Walker & Dunlop shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for First Bank and Walker & Dunlop, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Bank 0 0 1 0 3.00
Walker & Dunlop 0 2 1 0 2.33

First Bank currently has a consensus target price of $14.00, indicating a potential upside of 6.46%. Walker & Dunlop has a consensus target price of $44.00, indicating a potential downside of 18.29%. Given First Bank’s stronger consensus rating and higher probable upside, equities research analysts plainly believe First Bank is more favorable than Walker & Dunlop.

Valuation and Earnings

This table compares First Bank and Walker & Dunlop’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Bank $31.35 million 6.30 $9.61 million $0.64 20.55
Walker & Dunlop $649.05 million 2.59 $142.17 million $4.55 11.84

Walker & Dunlop has higher revenue and earnings than First Bank. Walker & Dunlop is trading at a lower price-to-earnings ratio than First Bank, indicating that it is currently the more affordable of the two stocks.

Dividends

First Bank pays an annual dividend of $0.08 per share and has a dividend yield of 0.6%. Walker & Dunlop does not pay a dividend. First Bank pays out 12.5% of its earnings in the form of a dividend.

Summary

Walker & Dunlop beats First Bank on 10 of the 15 factors compared between the two stocks.

First Bank Company Profile

First Bank is a commercial bank. The Company provides a range of lending, deposit and other financial products and services. It operates through Community Banking segment, which is engaged in providing a range of commercial and retail and related banking services. It offers a range of lending products to meet the needs of its customers located within its market areas, including commercial and industrial loans, commercial real estate loans (including owner-occupied, investor, and multi-family loans), residential real estate loans, and consumer and other loans. It offers a range of deposit instruments, including non-interest bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts and certificates of deposit. It operates 14 branches located in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Somerset, Randolph and Williamstown, New Jersey, and Trevose, Doylestown, Warminster, Bensalem and Levittown in Bucks County.

Walker & Dunlop Company Profile

Walker & Dunlop, Inc. is a holding company, which conducts its operations through Walker & Dunlop, LLC. The Company provides commercial real estate financial products and services primarily to developers and owners of multifamily properties. The Company originates, sells and services a range of multifamily and other commercial real estate financing products, including Multifamily Finance, Federal Housing Administration (FHA) Finance, Capital Markets, and Proprietary Capital. It originates and sells loans through the programs of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac, and together with Fannie Mae, the government-sponsored enterprises (GSEs)), the Government National Mortgage Association (Ginnie Mae) and the Federal Housing Administration, a division of the United States Department of Housing and Urban Development (together with Ginnie Mae, HUD).

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