Norwood Financial (NASDAQ:NWFL) vs. Pathfinder Bancorp (NASDAQ:PBHC) Financial Review

Norwood Financial (NASDAQ:NWFL) and Pathfinder Bancorp (NASDAQ:PBHC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Profitability

This table compares Norwood Financial and Pathfinder Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norwood Financial	16.17%	9.64%	0.78%
Pathfinder Bancorp	12.76%	8.05%	0.66%

Analyst Ratings

This is a summary of current recommendations and price targets for Norwood Financial and Pathfinder Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norwood Financial	0	0	0	0	N/A
Pathfinder Bancorp	0	0	0	0	N/A

Dividends

Norwood Financial pays an annual dividend of $1.20 per share and has a dividend yield of 4.9%. Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 3.3%. Norwood Financial pays out 58.0% of its earnings in the form of a dividend. Pathfinder Bancorp pays out 26.5% 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. Norwood Financial has increased its dividend for 6 consecutive years and Pathfinder Bancorp has increased its dividend for 1 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Norwood Financial and Pathfinder Bancorp’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norwood Financial	$103.66 million	1.90	$16.76 million	$2.07	11.73
Pathfinder Bancorp	$72.85 million	0.79	$9.29 million	$1.51	8.11

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

Institutional and Insider Ownership

28.1% of Norwood Financial shares are held by institutional investors. Comparatively, 26.7% of Pathfinder Bancorp shares are held by institutional investors. 9.1% of Norwood Financial shares are held by insiders. Comparatively, 24.0% of Pathfinder Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Norwood Financial has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Pathfinder Bancorp has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500.

Summary

Norwood Financial beats Pathfinder Bancorp on 12 of the 14 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 Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.