Contrasting Baylake (BYLK) and BancorpSouth Bank (BXS)

Baylake (NASDAQ: BYLK) and BancorpSouth Bank (NYSE:BXS) are both banks – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Institutional and Insider Ownership

66.4% of BancorpSouth Bank shares are owned by institutional investors. 2.6% of BancorpSouth Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Baylake pays an annual dividend of $0.36 per share and has a dividend yield of 2.1%. BancorpSouth Bank pays an annual dividend of $0.56 per share and has a dividend yield of 1.6%. Baylake pays out 42.4% of its earnings in the form of a dividend. BancorpSouth Bank pays out 34.4% 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. Baylake has raised its dividend for 5 consecutive years. Baylake is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Baylake and BancorpSouth Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Baylake 10.34% 4.05% 0.43%
BancorpSouth Bank 19.59% 8.97% 1.03%

Earnings and Valuation

This table compares Baylake and BancorpSouth Bank’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Baylake N/A N/A N/A $0.85 20.51
BancorpSouth Bank $762.21 million 4.15 $132.72 million $1.63 21.50

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

Volatility and Risk

Baylake has a beta of 3.79, indicating that its share price is 279% more volatile than the S&P 500. Comparatively, BancorpSouth Bank has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Baylake and BancorpSouth Bank, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Baylake 0 0 0 0 N/A
BancorpSouth Bank 0 8 1 0 2.11

BancorpSouth Bank has a consensus price target of $33.57, suggesting a potential downside of 4.22%. Given BancorpSouth Bank’s higher probable upside, analysts plainly believe BancorpSouth Bank is more favorable than Baylake.

Summary

BancorpSouth Bank beats Baylake on 11 of the 14 factors compared between the two stocks.

About Baylake

Baylake Corp. is a bank holding company. The Company’s primary activities consists of holding the stock of its subsidiary bank, Baylake Bank (the Bank), and providing a range of banking and related business activities through the Bank and its other subsidiaries. The Bank is an independent community bank offering a range of financial services primarily to small businesses and individuals located in its market area. The Bank provides a range of loan, deposit and other banking products and services to its business, individual or retail and municipal customers, which include safe deposit box services, personal and corporate trust services, treasury management, private banking, financial planning and electronic banking services, including mobile banking and eBanc, an Internet banking product for its customers. It offers investment advisory services through Admiral Asset Management, Inc. (Admiral). The Bank conducts its community banking business through over 20 service financial centers.

About BancorpSouth Bank

BancorpSouth Bank is a financial holding company. The Company, through its principal bank subsidiary, conducts commercial banking and financial services operations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee, Texas and Illinois. The Company’s segments include Community Banking, Insurance Agencies, and General Corporate and Other. Its Community Banking segment provides a range of deposit products, commercial loans and consumer loans. Its Insurance Agencies segment serves as agents in the sale of commercial lines of insurance and full lines of property and casualty, life, health and employee benefits products and services. Its General Corporate and Other segment includes mortgage banking, trust services, credit card activities, investment services and other activities not allocated to the Community Banking or Insurance Agencies segments.

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