Critical Review: Bank of the James Financial Group (NASDAQ:BOTJ) versus LINKBANCORP (NASDAQ:LNKB)

Bank of the James Financial Group (NASDAQ:BOTJ) and LINKBANCORP (NASDAQ:LNKB) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, institutional ownership and earnings.

Profitability

This table compares Bank of the James Financial Group and LINKBANCORP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of the James Financial Group	14.46%	13.36%	0.85%
LINKBANCORP	3.65%	7.86%	0.76%

Risk and Volatility

Bank of the James Financial Group has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, LINKBANCORP has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Insider & Institutional Ownership

18.5% of Bank of the James Financial Group shares are owned by institutional investors. Comparatively, 37.5% of LINKBANCORP shares are owned by institutional investors. 15.3% of Bank of the James Financial Group shares are owned by insiders. Comparatively, 35.8% of LINKBANCORP shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Bank of the James Financial Group and LINKBANCORP”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of the James Financial Group	$52.23 million	1.41	$8.70 million	$1.84	8.75
LINKBANCORP	$66.29 million	4.25	-$11.97 million	($0.07)	-107.71

Bank of the James Financial Group has higher earnings, but lower revenue than LINKBANCORP. LINKBANCORP is trading at a lower price-to-earnings ratio than Bank of the James Financial Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Bank of the James Financial Group and LINKBANCORP, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of the James Financial Group	0	0	0	0	0.00
LINKBANCORP	0	1	0	0	2.00

LINKBANCORP has a consensus target price of $7.50, indicating a potential downside of 0.53%. Given LINKBANCORP’s stronger consensus rating and higher possible upside, analysts plainly believe LINKBANCORP is more favorable than Bank of the James Financial Group.

Dividends

Bank of the James Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 2.5%. LINKBANCORP pays an annual dividend of $0.30 per share and has a dividend yield of 4.0%. Bank of the James Financial Group pays out 21.7% of its earnings in the form of a dividend. LINKBANCORP pays out -428.6% 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. LINKBANCORP is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

LINKBANCORP beats Bank of the James Financial Group on 8 of the 15 factors compared between the two stocks.

About Bank of the James Financial Group

Bank of the James Financial Group, Inc. operates as the bank holding company for Bank of the James that provides general retail and commercial banking services to individuals, businesses, associations and organizations, and governmental authorities in Virginia, the United States. It offers checking, savings, individual retirement, and health care saving accounts, as well as other time deposits, including money market accounts and certificates of deposit. The company also provides loans to small- and medium-sized businesses for the purchases of equipment, facilities upgrades, inventory acquisition, and various working capital purposes; commercial and residential construction and development loans; commercial real estate mortgage loans; residential mortgage loans; and secured and unsecured consumer loans, such as lines of credit and overdraft lines of credit, as well as personal, automobile, installment, demand, and home equity loans for personal, family, or household purposes. In addition, it offers other banking services, including safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, treasury management, and credit card merchant services. Further, the company provides mortgage banking; investment advisory services; securities brokerage and investment services; and telephone and internet banking services comprising online bill pay, as well as acts as an agent for insurance and annuity products. The company was founded in 1999 and is headquartered in Lynchburg, Virginia.

About LINKBANCORP

LINKBANCORP, Inc. operates as a bank holding company for The Gratz Bank, that provides various banking products and services to individuals, families, nonprofit, and business customers in Pennsylvania. Its deposit products include demand, saving, and money market accounts, as well as certificates of deposits. The company also offers commercial real estate, commercial business, commercial real estate construction, land development, residential real estate, home equity, consumer, agricultural, and municipal loans. It also provides online banking, mobile banking, direct and remote deposit, and cash management services. The company was incorporated in 2018 and is headquartered in Camp Hill, Pennsylvania.