Norwood Financial (NASDAQ:NWFL – Get Free Report) and Preferred Bank (NASDAQ:PFBC – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Norwood Financial and Preferred Bank, as reported by MarketBeat.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Norwood Financial | 0 | 0 | 0 | 0 | N/A |
Preferred Bank | 0 | 0 | 2 | 0 | 3.00 |
Preferred Bank has a consensus target price of $100.00, suggesting a potential upside of 20.00%. Given Preferred Bank’s higher possible upside, analysts plainly believe Preferred Bank is more favorable than Norwood Financial.
Dividends
Earnings & Valuation
This table compares Norwood Financial and Preferred Bank”s top-line revenue, earnings per share and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Norwood Financial | $103.66 million | 2.24 | $16.76 million | $1.62 | 17.69 |
Preferred Bank | $485.10 million | 2.48 | $150.04 million | $10.23 | 8.15 |
Preferred Bank has higher revenue and earnings than Norwood Financial. Preferred Bank is trading at a lower price-to-earnings ratio than Norwood Financial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Norwood Financial and Preferred Bank’s net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Norwood Financial | 11.52% | 7.40% | 0.59% |
Preferred Bank | 27.35% | 20.24% | 2.10% |
Risk and Volatility
Norwood Financial has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Preferred Bank has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500.
Institutional and Insider Ownership
28.1% of Norwood Financial shares are owned by institutional investors. Comparatively, 72.8% of Preferred Bank shares are owned by institutional investors. 9.3% of Norwood Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
Preferred Bank beats Norwood Financial on 12 of the 16 factors compared between the two stocks.
About Norwood Financial
Norwood Financial Corp. operates as the bank holding company for Wayne Bank that provides various banking products and services. The company accepts a range of deposit products, including interest-bearing and non-interest-bearing transaction accounts, and statement savings and money market accounts, as well as certificate of deposits. It also provides commercial loans comprising lines of credit, revolving credit, term loans, mortgages, secured lending products, and letter of credit facilities; municipal finance lending; construction loans for commercial construction projects and single-family residences; land loans; construction financing; consumer loans; mortgage lending to finance principal residences and second home dwellings; and indirect dealer financing of new and used automobiles, boats, and recreational vehicles. In addition, the company offers investment securities services; personal and business credit services; trust and investment products; and cash management, direct deposit, remote deposit capture, mobile deposit capture, automated clearing house activity, real estate settlement, and Internet and mobile banking services. Further, it engages in the annuity and mutual fund sale, and discount brokerage activities, as well as insurance agency business. The company serves consumers, businesses, nonprofit organizations, and municipalities. It operates branches in Northeastern Pennsylvania; and in Delaware, Sullivan, Ontario, Otsego, and Yates Counties, New York, as well as automated teller machines. Norwood Financial Corp. was founded in 1870 and is headquartered in Honesdale, Pennsylvania.
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.
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