Veritex Holdings (NASDAQ: VBTX) and Enterprise Bancorp (NASDAQ:EBTC) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for Veritex Holdings and Enterprise Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veritex Holdings 0 1 2 0 2.67
Enterprise Bancorp 0 0 0 0 N/A

Veritex Holdings presently has a consensus price target of $31.83, indicating a potential upside of 24.98%. Given Veritex Holdings’ higher probable upside, research analysts clearly believe Veritex Holdings is more favorable than Enterprise Bancorp.

Institutional & Insider Ownership

52.2% of Veritex Holdings shares are owned by institutional investors. Comparatively, 19.7% of Enterprise Bancorp shares are owned by institutional investors. 9.1% of Veritex Holdings shares are owned by insiders. Comparatively, 19.7% of Enterprise Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Veritex Holdings has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500. Comparatively, Enterprise Bancorp has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500.

Profitability

This table compares Veritex Holdings and Enterprise Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Veritex Holdings 22.61% 6.09% 0.93%
Enterprise Bancorp 18.50% 9.49% 0.81%

Dividends

Enterprise Bancorp pays an annual dividend of $0.54 per share and has a dividend yield of 1.6%. Veritex Holdings does not pay a dividend. Enterprise Bancorp pays out 30.0% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Veritex Holdings and Enterprise Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Veritex Holdings $49.17 million 7.88 $15.37 million $1.01 25.22
Enterprise Bancorp $104.25 million 3.79 $20.62 million $1.80 19.18

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

Summary

Veritex Holdings beats Enterprise Bancorp on 9 of the 15 factors compared between the two stocks.

Veritex Holdings Company Profile

Veritex Holdings, Inc. is a bank holding company. The Company, through its subsidiary, Veritex Community Bank (the Bank), a Texas state chartered bank, provides relationship-driven commercial banking products and services tailored to meet the needs of small to medium-sized businesses and professionals. It operates through community banking segment. The Bank provides a range of banking services to individual and corporate customers, which include commercial and retail lending, and the acceptance of checking and savings deposits. It offers a suite of online banking solutions, including access to account balances, online transfers, online bill payment and electronic delivery of customer statements, as well as automated teller machines, and banking by telephone, mail and personal appointment. It also offers debit cards, direct deposit, cashier’s checks and letters of credit, as well as treasury management services, including wire transfer services and automated clearinghouse services.

Enterprise Bancorp Company Profile

Enterprise Bancorp, Inc. operates as the holding company of Enterprise Bank and Trust Company (the Bank). The Company is engaged in the business of gathering deposits from the general public and investing primarily in loans and investment securities and utilizing the resulting cash flows to conduct operations, expand the branch network, and pay dividends to stockholders. Through the Bank and its subsidiaries, the Company offers a range of commercial and consumer loan products, deposit products and cash management services. The Company also offers investment advisory and wealth management, trust and insurance services. The Company offers lending services to business entities, non-profit organizations, professionals and individuals. Loans made to businesses include commercial mortgage loans; construction and land development loans; secured and unsecured commercial loans; lines of credit, and standby letters of credit.

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