Business First Bancshares (NASDAQ:BFST – Get Rating) and Norwood Financial (NASDAQ:NWFL – Get Rating) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.
Insider and Institutional Ownership
33.7% of Business First Bancshares shares are owned by institutional investors. Comparatively, 16.7% of Norwood Financial shares are owned by institutional investors. 7.6% of Business First Bancshares shares are owned by company insiders. Comparatively, 9.7% 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 stock will outperform the market over the long term.
This is a summary of current recommendations and price targets for Business First Bancshares and Norwood Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Business First Bancshares||0||0||0||1||4.00|
This table compares Business First Bancshares and Norwood Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Business First Bancshares||21.55%||10.74%||0.95%|
Business First Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.1%. Norwood Financial pays an annual dividend of $1.12 per share and has a dividend yield of 4.1%. Business First Bancshares pays out 22.7% of its earnings in the form of a dividend. Norwood Financial pays out 33.2% 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. Business First Bancshares has increased its dividend for 1 consecutive years and Norwood Financial has increased its dividend for 4 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Business First Bancshares and Norwood Financial’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Business First Bancshares||$206.22 million||2.46||$52.14 million||$2.11||10.64|
|Norwood Financial||$79.39 million||2.79||$24.92 million||$3.37||8.04|
Business First Bancshares has higher revenue and earnings than Norwood Financial. Norwood Financial is trading at a lower price-to-earnings ratio than Business First Bancshares, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Business First Bancshares has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, Norwood Financial has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500.
About Business First Bancshares
Business First Bancshares, Inc. operates as the bank holding company for b1BANK that provides various banking products and services. It offers various deposit products and services, including checking, demand, money market, time, and savings accounts; and certificates of deposits, remote deposit capture, and direct deposit services. The company also provides commercial and industrial loans, such as commercial lines of credit, letters of credit, working capital, term, equipment financing, asset acquisition, expansion and development, borrowing base, and other loan products; construction and development loans; commercial real estate loans; residential real estate loans comprising first and second lien 1-4 family mortgage loans, and home equity lines of credit; and consumer loans, including secured and unsecured installment and term loans. In addition, it offers wealth management products, including mutual funds, annuities, individual retirement accounts, and other financial products, as well as other fiduciary services and private banking products and services. Further, the company provides a range of other financial services comprising debit and credit cards, treasury and cash management, merchant, automated clearing house, lock-box, receivables factoring, correspondent banking, and other treasury services, as well as employee and payroll benefits solutions; and drive-through banking facilities, automated teller machines, night depository, personalized checks, electronic funds transfer, domestic and foreign wire transfer, traveler's checks, vault, loan and deposit sweep accounts, online and mobile banking, e-statements, and bank-by-mail services. As of March 01, 2022, it operates approximately 48 full-service banking centers and three loan production offices across Louisiana, and in the Dallas and Houston markets. Business First Bancshares, Inc. was incorporated in 2006 and is headquartered in Baton Rouge, Louisiana.
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 various loans, such as 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; 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; trust and investment products; and cash management, direct deposit, remote deposit capture, mobile deposit capture, mobile payment, 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 fourteen offices in Northeastern Pennsylvania; and sixteen offices in Delaware, Sullivan, Ontario, Otsego, and Yates Counties, New York, as well as thirty-one automated teller machines. Norwood Financial Corp. was founded in 1870 and is headquartered in Honesdale, Pennsylvania.
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