Critical Analysis: First Guaranty Bancshares (NASDAQ:FGBI) and LegacyTexas Financial Group (NASDAQ:LTXB)

First Guaranty Bancshares (NASDAQ:FGBI) and LegacyTexas Financial Group (NASDAQ:LTXB) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Valuation & Earnings

This table compares First Guaranty Bancshares and LegacyTexas Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Guaranty Bancshares $83.67 million 2.34 $14.21 million N/A N/A
LegacyTexas Financial Group $464.22 million 4.40 $154.18 million $2.90 14.46



LegacyTexas Financial Group has higher revenue and earnings than First Guaranty Bancshares.

Profitability

This table compares First Guaranty Bancshares and LegacyTexas Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Guaranty Bancshares 15.79% 9.39% 0.76%
LegacyTexas Financial Group 33.36% 13.43% 1.56%

Dividends

First Guaranty Bancshares pays an annual dividend of $0.64 per share and has a dividend yield of 2.9%. LegacyTexas Financial Group pays an annual dividend of $1.00 per share and has a dividend yield of 2.4%. LegacyTexas Financial Group pays out 34.5% of its earnings in the form of a dividend. First Guaranty Bancshares has raised its dividend for 3 consecutive years and LegacyTexas Financial Group has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

11.4% of First Guaranty Bancshares shares are held by institutional investors. Comparatively, 85.1% of LegacyTexas Financial Group shares are held by institutional investors. 41.4% of First Guaranty Bancshares shares are held by insiders. Comparatively, 2.9% of LegacyTexas Financial Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for First Guaranty Bancshares and LegacyTexas Financial Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Guaranty Bancshares 0 1 0 0 2.00
LegacyTexas Financial Group 0 6 0 0 2.00

First Guaranty Bancshares presently has a consensus price target of $28.00, suggesting a potential upside of 25.84%. LegacyTexas Financial Group has a consensus price target of $42.39, suggesting a potential upside of 1.07%. Given First Guaranty Bancshares’ higher possible upside, research analysts clearly believe First Guaranty Bancshares is more favorable than LegacyTexas Financial Group.

Volatility and Risk

First Guaranty Bancshares has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, LegacyTexas Financial Group has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.

Summary

LegacyTexas Financial Group beats First Guaranty Bancshares on 9 of the 13 factors compared between the two stocks.

First Guaranty Bancshares Company Profile

First Guaranty Bancshares, Inc. operates as the holding company for First Guaranty Bank that provides commercial banking services to businesses, professionals, and individuals in Louisiana and Texas. It offers various deposit products, including personal and business checking, savings, money market, and demand accounts, as well as time deposits. The company also provides loans, such as non-farm non-residential loans secured by real estate, commercial and industrial loans, one- to four-family residential loans, construction and land development loans, agricultural loans, farmland loans, consumer and other loans, and multifamily loans. In addition, it offers a range of consumer services, including personal and commercial credit cards, remote deposit capture, safe deposit boxes, official checks, Internet banking, automated teller machines, online bill pay, mobile banking, and lockbox services. The company operates through 27 banking facilities located in market services areas of Hammond, Baton Rouge, Lafayette, Shreveport-Bossier City, Dallas-Fort Worth-Arlington, and Waco. First Guaranty Bancshares, Inc. was founded in 1934 and is headquartered in Hammond, Louisiana.

LegacyTexas Financial Group Company Profile

LegacyTexas Financial Group, Inc. operates as the holding company for LegacyTexas Bank that provides various banking products and services in the United States. Its deposit products include interest-bearing and non-interest-bearing demand accounts, savings, money market, certificates of deposit, and individual retirement accounts. The company's lending products comprise commercial and consumer real estate loans; secured and unsecured commercial and industrial loans; permanent loans secured by first and second mortgages on one- to four-family residences; construction and land loans; and secured and unsecured consumer loans, including new and used automobile loans, recreational vehicle loans, and loans secured by savings deposits. It also provides insurance and title services. As of January 23, 2018, the company had 3 administrative offices, 44 full-service branches, and 1 commercial loan production office located in Houston, Texas, as well as a Warehouse Purchase Program office located in Littleton, Colorado. The company was formerly known as ViewPoint Financial Group, Inc. and changed its name to LegacyTexas Financial Group, Inc. in January 2015. LegacyTexas Financial Group, Inc. is headquartered in Plano, Texas.

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