First Mid Bancshares (NASDAQ:FMBH) and Bankwell Financial Group (NASDAQ:BWFG) Critical Analysis

First Mid Bancshares (NASDAQ:FMBH) and Bankwell Financial Group (NASDAQ:BWFG) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.

Profitability

This table compares First Mid Bancshares and Bankwell Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Mid Bancshares	19.69%	10.44%	1.23%
Bankwell Financial Group	16.94%	12.21%	1.08%

Volatility and Risk

First Mid Bancshares has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, Bankwell Financial Group has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for First Mid Bancshares and Bankwell Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Mid Bancshares	0	2	4	0	2.67
Bankwell Financial Group	0	2	2	0	2.50

First Mid Bancshares presently has a consensus target price of $43.75, indicating a potential upside of 0.18%. Bankwell Financial Group has a consensus target price of $52.00, indicating a potential downside of 1.33%. Given First Mid Bancshares’ stronger consensus rating and higher possible upside, analysts plainly believe First Mid Bancshares is more favorable than Bankwell Financial Group.

Insider & Institutional Ownership

47.6% of First Mid Bancshares shares are owned by institutional investors. Comparatively, 35.8% of Bankwell Financial Group shares are owned by institutional investors. 6.0% of First Mid Bancshares shares are owned by company insiders. Comparatively, 21.0% of Bankwell Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

First Mid Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 1.5%. First Mid Bancshares pays out 26.0% of its earnings in the form of a dividend. Bankwell Financial Group pays out 18.0% 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. First Mid Bancshares has increased its dividend for 3 consecutive years. First Mid Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares First Mid Bancshares and Bankwell Financial Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Mid Bancshares	$342.27 million	3.40	$91.75 million	$3.84	11.37
Bankwell Financial Group	$207.71 million	2.02	$35.20 million	$4.44	11.87

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

Summary

First Mid Bancshares beats Bankwell Financial Group on 12 of the 17 factors compared between the two stocks.

About First Mid Bancshares

First Mid Bancshares, Inc., a financial holding company, provides community banking products and services to commercial, retail, and agricultural customers in the United States. It accepts various deposit products, such as demand deposits, savings accounts, money market deposits, and time deposits. The company’s loan products include commercial real estate, commercial and industrial, agricultural and agricultural real estate, residential real estate, and consumer loans, as well as construction and land development, 1-4 family residential properties, and multifamily residential properties loans; and other loans comprising loans to municipalities to support community projects, such as infrastructure improvements or equipment purchases. It also offers wealth management services, which include estate planning, investment, and farm management and brokerage services for individuals; employee benefit services for businesses; and farm management and brokerage services. In addition, the company provides property and casualty, senior insurance products, and group medical insurance for businesses; and personal lines insurance to individuals. The company was formerly known as First Mid-Illinois Bancshares, Inc. and changed its name to First Mid Bancshares, Inc. in April 2019. First Mid Bancshares, Inc. was founded in 1865 and is headquartered in Mattoon, Illinois.

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, owner-occupied commercial real estate, 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 to finance insurance premiums; overdraft lines of credit; and unsecured personal loans. It operates branches in New Canaan, Stamford, Fairfield, 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.