Critical Comparison: Fidelity D & D Bancorp (NASDAQ:FDBC) & Shore Bancshares (NASDAQ:SHBI)

Shore Bancshares (NASDAQ:SHBI) and Fidelity D & D Bancorp (NASDAQ:FDBC) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, earnings, profitability, institutional ownership and dividends.

Valuation and Earnings

This table compares Shore Bancshares and Fidelity D & D Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shore Bancshares	$201.70 million	1.95	$43.89 million	$1.33	8.86
Fidelity D & D Bancorp	$79.92 million	2.89	$20.79 million	$3.61	10.95

Shore Bancshares has higher revenue and earnings than Fidelity D & D Bancorp. Shore Bancshares is trading at a lower price-to-earnings ratio than Fidelity D & D Bancorp, indicating that it is currently the more affordable of the two stocks.

Dividends

Shore Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 4.1%. Fidelity D & D Bancorp pays an annual dividend of $1.60 per share and has a dividend yield of 4.0%. Shore Bancshares pays out 36.1% of its earnings in the form of a dividend. Fidelity D & D Bancorp pays out 44.3% 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. Shore Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and price targets for Shore Bancshares and Fidelity D & D Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shore Bancshares	0	1	2	0	2.67
Fidelity D & D Bancorp	0	0	0	0	0.00

Shore Bancshares presently has a consensus price target of $20.00, indicating a potential upside of 69.78%. Given Shore Bancshares’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Shore Bancshares is more favorable than Fidelity D & D Bancorp.

Insider and Institutional Ownership

59.8% of Shore Bancshares shares are owned by institutional investors. Comparatively, 20.0% of Fidelity D & D Bancorp shares are owned by institutional investors. 8.6% of Shore Bancshares shares are owned by insiders. Comparatively, 21.0% of Fidelity D & D Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Shore Bancshares and Fidelity D & D Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shore Bancshares	13.44%	10.40%	0.93%
Fidelity D & D Bancorp	16.50%	10.49%	0.82%

Volatility & Risk

Shore Bancshares has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Fidelity D & D Bancorp has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.

Summary

Shore Bancshares beats Fidelity D & D Bancorp on 10 of the 16 factors compared between the two stocks.

About Shore Bancshares

Shore Bancshares, Inc. operates as a bank holding company for the Shore United Bank, N.A. that provides various commercial and consumer banking products and services to individuals, businesses, and other organizations. It offers checking, savings, overnight investment sweep, and money market accounts; and regular and IRA certificates of deposit, as well as CDARS programs and cash management services. The company also provides commercial loans, such as secured and unsecured loans, working capital loans, lines of credit, term loans, accounts receivable financing, real estate acquisition and development loans, construction loans, and letters of credit; residential real estate construction loans; residential mortgage loans; and loans to consumers, including home equity, automobile, installment, home improvement, and personal lines of credit, as well as other consumer financing products. In addition, it offers trust, asset management, and financial planning services; treasury management services, such as merchant card processing, remote deposit capture, and ACH origination, as well as telephone, mobile, and Internet banking services; safe deposit boxes; debit and credit cards; and automatic teller machine services. Shore Bancshares, Inc. was founded in 1876 and is headquartered in Easton, Maryland.

About Fidelity D & D Bancorp

Fidelity D&D Bancorp, Inc. is a holding company, which engages in the provision of commercial banking services. It operates through the following segments: Commercial and Industrial, Commercial Real Estate, Consumer, and Residential Real Estate. The Commercial and Industrial segment refers to identified historic and/or the projected cash flows of the borrower and secondarily to the underlying collateral provided by the borrower. The Commercial Real Estate segment offers finances purchase of real estate, refinance existing obligations, and/or to provide capital. The Consumer segment includes home equity installment loans and lines of credit. The Residential Real Estate segment operates as a secured first lien position of the borrower’s residential real estate. The company was founded in 1902 and is headquartered in Dunmore, PA.