Head to Head Review: Isabella Bank (OTCMKTS:ISBA) versus Bankwell Financial Group (NASDAQ:BWFG)

Isabella Bank (OTCMKTS:ISBA) and Bankwell Financial Group (NASDAQ:BWFG) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.

Dividends

Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 5.6%. Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 3.0%. Isabella Bank pays out 38.5% of its earnings in the form of a dividend. Bankwell Financial Group pays out 17.5% 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. Bankwell Financial Group has raised its dividend for 5 consecutive years.

Valuation & Earnings

This table compares Isabella Bank and Bankwell Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Isabella Bank	$79.46 million	1.90	$22.24 million	$2.91	6.91
Bankwell Financial Group	$120.99 million	1.71	$37.43 million	$4.57	5.77

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

Institutional & Insider Ownership

32.8% of Bankwell Financial Group shares are owned by institutional investors. 9.5% of Isabella Bank shares are owned by insiders. Comparatively, 25.8% of Bankwell Financial Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Isabella Bank and Bankwell Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Isabella Bank	0	0	1	0	3.00
Bankwell Financial Group	0	0	2	0	3.00

Isabella Bank currently has a consensus price target of $25.00, suggesting a potential upside of 24.38%. Bankwell Financial Group has a consensus price target of $30.50, suggesting a potential upside of 15.57%. Given Isabella Bank’s higher possible upside, equities research analysts clearly believe Isabella Bank is more favorable than Bankwell Financial Group.

Profitability

This table compares Isabella Bank and Bankwell Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Isabella Bank	25.64%	11.90%	1.08%
Bankwell Financial Group	21.69%	14.80%	1.14%

Volatility & Risk

Isabella Bank has a beta of -0.04, meaning that its stock price is 104% less volatile than the S&P 500. Comparatively, Bankwell Financial Group has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Summary

Bankwell Financial Group beats Isabella Bank on 11 of the 16 factors compared between the two stocks.

About Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.

About Bankwell Financial Group

Bankwell Financial Group, Inc. operates as the bank holding company for Bankwell Bank that provides various banking services for individual and commercial customers. It offers various traditional depository products, including checking, savings, money market, and certificates of deposit. The company also provides first mortgage loans secured by one-to-four family owner occupied residential properties for personal use; home equity loans and home equity lines of credit secured by owner occupied one-to-four family residential properties; loans secured by commercial real estate, multi-family dwellings, and investor-owned one-to-four family dwellings; commercial construction loans for commercial development projects, including apartment buildings and condominiums, as well as office buildings, retail, and other income producing properties; land loans; commercial business loans secured by assignments of corporate assets and personal guarantees of the business owners; loans secured by savings or certificate accounts and automobiles; and unsecured personal loans and overdraft lines of credit. It operates branches in New Canaan, Stamford, Fairfield, Wilton, Westport, Darien, Norwalk, and Hamden, Connecticut. The company was formerly known as BNC Financial Group, Inc. and changed its name to Bankwell Financial Group, Inc. in September 2013. Bankwell Financial Group, Inc. was founded in 2002 and is headquartered in New Canaan, Connecticut.