Contrasting Heartland Financial USA (NASDAQ:HTLF) and RBB Bancorp (NASDAQ:RBB)

RBB Bancorp (NASDAQ:RBB) and Heartland Financial USA (NASDAQ:HTLF) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent recommendations for RBB Bancorp and Heartland Financial USA, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RBB Bancorp	0	4	0	0	2.00
Heartland Financial USA	0	1	3	1	3.00

RBB Bancorp currently has a consensus target price of $20.88, suggesting a potential downside of 9.16%. Heartland Financial USA has a consensus target price of $45.60, suggesting a potential downside of 18.41%. Given RBB Bancorp’s higher probable upside, equities research analysts clearly believe RBB Bancorp is more favorable than Heartland Financial USA.

Institutional & Insider Ownership

40.1% of RBB Bancorp shares are held by institutional investors. Comparatively, 71.6% of Heartland Financial USA shares are held by institutional investors. 6.6% of RBB Bancorp shares are held by company insiders. Comparatively, 1.8% of Heartland Financial USA shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

RBB Bancorp has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Heartland Financial USA has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Profitability

This table compares RBB Bancorp and Heartland Financial USA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RBB Bancorp	16.38%	6.94%	0.89%
Heartland Financial USA	7.12%	11.29%	1.04%

Valuation & Earnings

This table compares RBB Bancorp and Heartland Financial USA’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RBB Bancorp	$236.17 million	1.73	$42.47 million	$2.28	10.08
Heartland Financial USA	$574.71 million	4.17	$79.92 million	$1.66	33.67

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

Dividends

RBB Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 2.8%. Heartland Financial USA pays an annual dividend of $1.20 per share and has a dividend yield of 2.1%. RBB Bancorp pays out 28.1% of its earnings in the form of a dividend. Heartland Financial USA pays out 72.3% 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. RBB Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Heartland Financial USA beats RBB Bancorp on 10 of the 16 factors compared between the two stocks.

About RBB Bancorp

RBB Bancorp operates as the bank holding company for Royal Business Bank that provides various banking products and services to the Chinese-American, Korean-American, and other Asian-American communities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company also offers commercial and industrial lines of credit, term loans, mortgage warehouse lines, and international trade discounts; commercial real estate loans; residential, commercial, and land acquisition and development construction loans; small business administration loans; and single-family residential mortgage loans. In addition, it provides international letters of credit, SWIFT, export advisory, trade finance discount, and foreign exchange services; and remote deposit, e-banking, and mobile banking services. The company serves individuals, businesses, municipalities, and other entities. It operates branches in the Western region with branches in Los Angeles County, California; Orange County, California; Ventura County, California; Clark County, Nevada; Honolulu, Hawaii, as well as in Eastern region with branches in Manhattan, Brooklyn and Queens, New York; Chicago, Illinois; and Edison, New Jersey. RBB Bancorp was founded in 2008 and is headquartered in Los Angeles, California.

About Heartland Financial USA

Heartland Financial USA, Inc., a bank holding company, provides commercial, small business, and consumer banking services to individuals and businesses in the United States. The company accepts various deposit products, including checking, demand deposit accounts, NOW accounts, savings, money market, and individual retirement; certificates of deposit; and other time deposits. It offers loans, including commercial and industrial, commercial real estate, agricultural, small business, and real estate mortgage loans; consumer loans comprising motor vehicle, home improvement, home equity line of credit, and fixed rate home equity and personal lines of credit; and credit cards for commercial, business, and personal use. In addition, the company provides business and personal online banking, and mobile banking; bill payment, remote deposit capture, and treasury management services; debit cards; automated teller machines; and automated clearing house services, wire transfers, insured cash sweeps, zero balance accounts, lockbox, image cash letter, remote deposit capture, commercial cards for travel and entertainment purchasing, merchant services to receive credit card payments, investment sweep accounts, reconciliation services, online invoice processing, foreign exchange and positive pay fraud prevention services for checks and automated clearing house services payments. Further, it offers wealth management, trust services, brokerage services, and fixed rate annuity products; and investment services, including mutual funds, individual retirement products, and education savings products. Heartland Financial USA, Inc. was founded in 1981 and is headquartered in Denver, Colorado.