WashingtonFirst Bankshares (NASDAQ: WFBI) and Enterprise Financial Services (NASDAQ:EFSC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, profitability, risk, institutional ownership and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for WashingtonFirst Bankshares and Enterprise Financial Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WashingtonFirst Bankshares 0 1 0 0 2.00
Enterprise Financial Services 0 1 1 0 2.50

WashingtonFirst Bankshares currently has a consensus target price of $28.00, suggesting a potential downside of 18.18%. Enterprise Financial Services has a consensus target price of $47.50, suggesting a potential upside of 8.20%. Given Enterprise Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Enterprise Financial Services is more favorable than WashingtonFirst Bankshares.

Risk and Volatility

WashingtonFirst Bankshares has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, Enterprise Financial Services has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Insider & Institutional Ownership

55.9% of WashingtonFirst Bankshares shares are owned by institutional investors. Comparatively, 74.5% of Enterprise Financial Services shares are owned by institutional investors. 20.7% of WashingtonFirst Bankshares shares are owned by insiders. Comparatively, 5.6% of Enterprise Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares WashingtonFirst Bankshares and Enterprise Financial Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
WashingtonFirst Bankshares $101.35 million 4.23 $18.00 million $1.51 22.66
Enterprise Financial Services $178.28 million 5.68 $48.83 million $2.42 18.14

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

Profitability

This table compares WashingtonFirst Bankshares and Enterprise Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WashingtonFirst Bankshares 19.00% 18.37% 1.00%
Enterprise Financial Services 24.73% 11.15% 1.16%

Dividends

WashingtonFirst Bankshares pays an annual dividend of $0.21 per share and has a dividend yield of 0.6%. Enterprise Financial Services pays an annual dividend of $0.44 per share and has a dividend yield of 1.0%. WashingtonFirst Bankshares pays out 13.9% of its earnings in the form of a dividend. Enterprise Financial Services pays out 18.2% 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.

Summary

Enterprise Financial Services beats WashingtonFirst Bankshares on 12 of the 16 factors compared between the two stocks.

WashingtonFirst Bankshares Company Profile

WashingtonFirst Bankshares, Inc. is a bank holding company. The Company, through its subsidiary, WashingtonFirst Bank (the Bank), operates banking offices throughout the Washington, D.C. metropolitan area. The Company’s segments include Commercial Bank, Mortgage Bank, Wealth Management and Other. In addition, the Company provides wealth management services through its subsidiary, 1st Portfolio, Inc. (Wealth Advisors), located in Fairfax, Virginia, and mortgage banking services through the Bank’s subsidiary, WashingtonFirst Mortgage Corporation, which operates in two locations: Fairfax, Virginia and Rockville, Maryland. The Company offers a range of commercial banking products and services to small-to-medium sized businesses, not-for-profit organizations, professional service firms and individuals in the greater Washington, D.C. metropolitan area.

Enterprise Financial Services Company Profile

Enterprise Financial Services Corp is a financial holding company for a full service banking subsidiary, Enterprise Bank & Trust (the Bank). The Bank offers banking and wealth management services to individuals and business customers primarily located in the St. Louis, Kansas City and Phoenix metropolitan markets. The Company offers a range of business and personal banking services, and wealth management services. Its tax credit brokerage activities consist of the acquisition of Federal and State tax credits and the sale of these tax credits to clients. Enterprise Trust, a division of the Bank (Enterprise Trust or Trust), provides financial planning, estate planning, investment management, and trust services to businesses, individuals, institutions, retirement plans and non-profit organizations. It also offers a range of Treasury Management products and services that benefit businesses ranging from large national clients to smallest local merchants.

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