ChoiceOne Financial Services (NASDAQ:COFS) and Northpointe Bancshares (NYSE:NPB) Critical Analysis

ChoiceOne Financial Services (NASDAQ:COFS) and Northpointe Bancshares (NYSE:NPB) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Dividends

ChoiceOne Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 3.2%. Northpointe Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. ChoiceOne Financial Services pays out 32.0% of its earnings in the form of a dividend. Northpointe Bancshares pays out 5.6% 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. ChoiceOne Financial Services has raised its dividend for 13 consecutive years. ChoiceOne Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for ChoiceOne Financial Services and Northpointe Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ChoiceOne Financial Services	0	1	2	0	2.67
Northpointe Bancshares	2	1	2	0	2.00

ChoiceOne Financial Services presently has a consensus price target of $37.50, suggesting a potential upside of 2.07%. Northpointe Bancshares has a consensus price target of $20.25, suggesting a potential upside of 27.80%. Given Northpointe Bancshares’ higher possible upside, analysts plainly believe Northpointe Bancshares is more favorable than ChoiceOne Financial Services.

Risk & Volatility

ChoiceOne Financial Services has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, Northpointe Bancshares has a beta of 0.09, indicating that its share price is 91% less volatile than the S&P 500.

Insider and Institutional Ownership

19.9% of ChoiceOne Financial Services shares are owned by institutional investors. 6.5% of ChoiceOne Financial Services shares are owned by company insiders. Comparatively, 18.3% of Northpointe Bancshares 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.

Profitability

This table compares ChoiceOne Financial Services and Northpointe Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ChoiceOne Financial Services	22.66%	12.13%	1.30%
Northpointe Bancshares	16.27%	13.88%	1.12%

Valuation and Earnings

This table compares ChoiceOne Financial Services and Northpointe Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ChoiceOne Financial Services	$227.62 million	2.41	$28.18 million	$3.63	10.12
Northpointe Bancshares	$471.18 million	1.16	$83.41 million	$2.13	7.44

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

Summary

ChoiceOne Financial Services beats Northpointe Bancshares on 10 of the 16 factors compared between the two stocks.

About ChoiceOne Financial Services

ChoiceOne Financial Services, Inc. (NASDAQ: COFS) is the bank holding company for ChoiceOne Bank, a community banking organization headquartered in Sparta, Michigan. The company serves individuals, families, farmers and businesses through a network of branches and digital banking channels primarily across western and central Michigan. ChoiceOne Bank provides a range of traditional banking products and services, including checking and savings accounts, certificates of deposit, residential mortgages, home equity financing, consumer loans and commercial lending.

About Northpointe Bancshares

Northpointe Bancshares, Inc. is a bank holding company headquartered in Grand Rapids, Michigan, and the parent of Northpointe Bank. The company provides banking and mortgage services to consumers and businesses. Its offerings include residential mortgage lending, deposit accounts and commercial banking services. Northpointe Bank also works with mortgage-industry partners through lending and related financial services. Based in Michigan, the company serves customers and business partners across the United States.