Norwood Financial (NASDAQ:NWFL) and Union Bankshares (NASDAQ:UNB) Critical Review

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

Dividends

Norwood Financial pays an annual dividend of $1.24 per share and has a dividend yield of 4.7%. Union Bankshares pays an annual dividend of $1.44 per share and has a dividend yield of 4.2%. Norwood Financial pays out 1,377.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Union Bankshares pays out 73.5% of its earnings in the form of a dividend. Norwood Financial has increased its dividend for 7 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norwood Financial	0	2	1	0	2.33
Union Bankshares	0	0	0	0	0.00

Norwood Financial presently has a consensus target price of $28.17, suggesting a potential upside of 6.09%. Given Norwood Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Norwood Financial is more favorable than Union Bankshares.

Institutional and Insider Ownership

28.1% of Norwood Financial shares are owned by institutional investors. Comparatively, 14.8% of Union Bankshares shares are owned by institutional investors. 9.1% of Norwood Financial shares are owned by company insiders. Comparatively, 1.8% of Union Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Norwood Financial and Union Bankshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norwood Financial	$54.53 million	4.51	-$160,000.00	$0.09	295.00
Union Bankshares	$47.96 million	3.23	$8.80 million	$1.96	17.43

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

Volatility and Risk

Norwood Financial has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, Union Bankshares has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Profitability

This table compares Norwood Financial and Union Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norwood Financial	-0.16%	8.38%	0.69%
Union Bankshares	11.74%	13.09%	0.60%

Summary

Norwood Financial beats Union Bankshares on 12 of the 17 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 Union Bankshares

Union Bankshares, Inc. operates as the bank holding company for Union Bank that provides retail, commercial, and municipal banking products and services in northern Vermont and New Hampshire. It offers retail depository services, such as personal checking, savings, money market, IRA/SEP/KEOGH, and health savings accounts, as well as certificates of deposit. The company also provides commercial real estate loans; commercial loans for plant and equipment, working capital, real estate renovation, and other business purposes to business owners and investors; small business administration guaranteed loans; residential construction and mortgage loans; municipal financing, including loans and excess deposits secured by FHLBB letters of credit; and home improvement loans and overdraft checking privileges against preauthorized lines of credit. In addition, it offers online cash management services, including account reconciliation, credit card depository, automated clearing house origination, wire transfers, positive pay and night depository services; merchant credit card services for the deposit and immediate credit of sales drafts; remote deposit capture services; and online mortgage application and consumer deposit account opening services. Further, the company provides business checking accounts; standby letters of credit, bank checks or money orders, and safe deposit boxes; ATM cards and services; debit cards; telephone, internet, and mobile banking services, including bill pay; and wealth management, fiduciary, and trust services. It offers retail banking services to individuals; and commercial banking services to small and medium sized business corporations, limited liability companies, partnerships, and sole proprietorships, as well as nonprofit organizations, local municipalities, and school districts. Union Bankshares, Inc. was founded in 1891 and is headquartered in Morrisville, Vermont.