Capital Bancorp (NASDAQ:CBNK – Get Free Report) and Preferred Bank (NASDAQ:PFBC – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.
Valuation and Earnings
This table compares Capital Bancorp and Preferred Bank”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Capital Bancorp | $310.06 million | 2.30 | $57.17 million | $3.31 | 13.23 |
| Preferred Bank | $286.37 million | 5.39 | $133.63 million | $10.83 | 9.87 |
Preferred Bank has lower revenue, but higher earnings than Capital Bancorp. Preferred Bank is trading at a lower price-to-earnings ratio than Capital Bancorp, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
56.1% of Capital Bancorp shares are held by institutional investors. Comparatively, 72.8% of Preferred Bank shares are held by institutional investors. 33.5% of Capital Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Profitability
This table compares Capital Bancorp and Preferred Bank’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Capital Bancorp | 16.29% | 13.63% | 1.49% |
| Preferred Bank | 26.20% | 16.84% | 1.72% |
Analyst Recommendations
This is a summary of recent recommendations and price targets for Capital Bancorp and Preferred Bank, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Capital Bancorp | 0 | 6 | 1 | 0 | 2.14 |
| Preferred Bank | 0 | 3 | 2 | 2 | 2.86 |
Capital Bancorp presently has a consensus price target of $41.00, indicating a potential downside of 6.35%. Preferred Bank has a consensus price target of $113.33, indicating a potential upside of 6.05%. Given Preferred Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Preferred Bank is more favorable than Capital Bancorp.
Dividends
Capital Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Preferred Bank pays an annual dividend of $3.20 per share and has a dividend yield of 3.0%. Capital Bancorp pays out 16.9% of its earnings in the form of a dividend. Preferred Bank pays out 29.5% 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. Capital Bancorp has increased its dividend for 3 consecutive years and Preferred Bank has increased its dividend for 5 consecutive years. Preferred Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Capital Bancorp has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Preferred Bank has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.
Summary
Preferred Bank beats Capital Bancorp on 14 of the 18 factors compared between the two stocks.
About Capital Bancorp
Capital Bancorp, Inc. operates as the bank holding company for Capital Bank, N.A. that provides various banking products and services to businesses, not-for-profit associations, and entrepreneurs in Maryland, Virginia, and the District of Columbia. It operates through Commercial Banking, Capital Bank Home Loans, and OpenSky segments. The company offers a range of deposit products, including checking and savings, time, interest bearing and noninterest-bearing demand, and money market accounts, as well as certificates of deposit; and credit cards. It also originates residential mortgages; issues trust preferred securities; and provides residential and commercial real estate, construction, and commercial and industrial loans, as well as other consumer loans, such as term loans, car loans, and boat loans to small to medium-sized businesses, professionals, real estate investors, and small residential builders and individuals. Capital Bancorp, Inc. was founded in 1974 and is headquartered in Rockville, Maryland.
About Preferred Bank
Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and small business administration loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, and bills purchase programs. Further, it provides cash management services; and internet, mobile, and tablet banking services. The company operates through full-service branch offices in the California counties of Los Angeles, Orange and San Francisco; Flushing, New York; Houston suburb of Sugar Land, Texas; and a satellite office in Manhattan, New York. The company was incorporated in 1991 and is headquartered in Los Angeles, California.
Receive News & Ratings for Capital Bancorp Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Capital Bancorp and related companies with MarketBeat.com's FREE daily email newsletter.
