Avidbank (OTCMKTS:AVBH) and Royal Bank of Canada (NYSE:RY) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, earnings, profitability, dividends, valuation and analyst recommendations.

Risk and Volatility

Avidbank has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500. Comparatively, Royal Bank of Canada has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Avidbank and Royal Bank of Canada, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avidbank 0 0 0 0 N/A
Royal Bank of Canada 1 3 6 0 2.50

Royal Bank of Canada has a consensus target price of $103.67, suggesting a potential upside of 28.97%. Given Royal Bank of Canada’s higher possible upside, analysts plainly believe Royal Bank of Canada is more favorable than Avidbank.

Dividends

Royal Bank of Canada pays an annual dividend of $3.06 per share and has a dividend yield of 3.8%. Avidbank does not pay a dividend. Royal Bank of Canada pays out 46.9% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Avidbank and Royal Bank of Canada’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Avidbank $45.30 million 3.04 $11.12 million N/A N/A
Royal Bank of Canada $43.93 billion 2.63 $9.64 billion $6.53 12.31

Royal Bank of Canada has higher revenue and earnings than Avidbank.

Insider and Institutional Ownership

10.0% of Avidbank shares are held by institutional investors. Comparatively, 41.6% of Royal Bank of Canada shares are held by institutional investors. 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.

Profitability

This table compares Avidbank and Royal Bank of Canada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Avidbank 25.14% 12.24% 1.35%
Royal Bank of Canada 20.04% 17.36% 0.96%

Summary

Royal Bank of Canada beats Avidbank on 9 of the 13 factors compared between the two stocks.

About Avidbank

Avidbank Holdings, Inc. operates as the bank holding company for Avidbank that provides financial products and services to small and middle-market businesses, professionals, and individuals in the San Mateo, San Francisco, and Santa Clara counties. The company offers business and personal deposit products, such as checking account, money market account, saving account, and certificates of deposit. Its personal lending products include secured and unsecured lines of credit, home equity lines of credit, remodel and new home construction loans, and term loans; corporate banking offers working capital lines of credit, equipment loans, acquisition financing, shareholder buyouts, ESOP loans, and owner-occupied real estate loans; and commercial real estate lending offers permanent loans and bridge financing products. The company provides financing solutions, such as technology and asset-based lending, and sponsor finance. The company also offers construction lending products, including land acquisition loans, pre-development loans, construction spec SFD, owner-occupied SFD, condominiums, subdivision, unsecured business lines, real estate bridge loans, and RLOC – real estate secured loans. In addition, it provides various services, such as automated clearing house payments and collections, bill pay, wire transfer, lockbox, merchant, remote deposit capture, ATM/debit cards, credit cards, business courier, cash management, and notary services. Avidbank Holdings, Inc. was founded in 2003 and is headquartered in San Jose, California.

About Royal Bank of Canada

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers check and savings accounts; home equity and auto financing, personal lending, private banking, mutual fund, self-directed brokerage account, and guaranteed investment certificate services; and credit cards, and payment products and solutions for individuals. It also provides lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, and trade products and services to small and medium-sized commercial businesses. In addition, this segment offers international financing and trade promotion services through branches, automated teller machines, and online and mobile banking. The company's Wealth Management provides investment, trust, banking, credit, and other wealth management solutions to high and ultra-high net worth clients; and asset management products to institutional and individual clients through its distribution channels and third-party distributors. Its Insurance segment offers life, health, home, auto, travel, wealth, annuities, and reinsurance advice and solutions; and creditor and business insurance services to individual, business, and group clients through its field sales force, advice centers, and online, as well as through independent insurance advisors and affinity relationships. The company's Investor & Treasury Services segment provides asset, cash management, transaction banking, and treasury services to institutional clients; correspondent banking and trade finance services for financial institutions; and short-term funding and liquidity management services. Its Capital Markets segment offers corporate and investment banking, as well as equity and debt origination, distribution, sale, and trading services for corporations, institutional investors, asset managers, governments, and central banks. The company was founded in 1864 and is headquartered in Toronto, Canada.

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