Critical Analysis: ChoiceOne Financial Services (NASDAQ:COFS) & Parke Bancorp (NASDAQ:PKBK)

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

Insider and Institutional Ownership

49.7% of Parke Bancorp shares are owned by institutional investors. Comparatively, 19.9% of ChoiceOne Financial Services shares are owned by institutional investors. 15.3% of Parke Bancorp shares are owned by company insiders. Comparatively, 7.9% of ChoiceOne Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Parke Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 3.9%. ChoiceOne Financial Services pays an annual dividend of $1.12 per share and has a dividend yield of 3.9%. Parke Bancorp pays out 31.7% of its earnings in the form of a dividend. ChoiceOne Financial Services pays out 34.4% 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. Parke Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Parke Bancorp	21.25%	9.41%	1.35%
ChoiceOne Financial Services	19.21%	12.44%	1.04%

Analyst Ratings

This is a summary of current ratings and price targets for Parke Bancorp and ChoiceOne Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Parke Bancorp	0	0	0	0	0.00
ChoiceOne Financial Services	0	0	3	0	3.00

ChoiceOne Financial Services has a consensus target price of $37.00, suggesting a potential upside of 28.16%. Given ChoiceOne Financial Services’ stronger consensus rating and higher possible upside, analysts plainly believe ChoiceOne Financial Services is more favorable than Parke Bancorp.

Risk & Volatility

Parke Bancorp has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, ChoiceOne Financial Services has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Valuation and Earnings

This table compares Parke Bancorp and ChoiceOne Financial Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Parke Bancorp	$63.01 million	3.48	$27.51 million	$2.27	8.17
ChoiceOne Financial Services	$92.44 million	2.80	$26.73 million	$3.26	8.86

Parke Bancorp has higher earnings, but lower revenue than ChoiceOne Financial Services. Parke Bancorp 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

Parke Bancorp beats ChoiceOne Financial Services on 9 of the 17 factors compared between the two stocks.

About Parke Bancorp

Parke Bancorp, Inc. operates as the bank holding company for Parke Bank that provides personal and business financial services to individuals and small to mid-sized businesses. The company offers various deposit products, including checking, savings, time, money market, and individual retirement accounts, as well as certificates of deposit. Its loan portfolio comprises commercial and industrial, construction, commercial and residential real estate mortgage, and consumer loans. In addition, the company provides debit cards, internet banking, and online bill payment services. Parke Bancorp, Inc. was founded in 1999 and is headquartered in Washington Township, New Jersey.

About ChoiceOne Financial Services

ChoiceOne Financial Services, Inc. operates as the bank holding company for ChoiceOne Bank that provides banking services to corporations, partnerships, and individuals in Michigan. The company offers various deposit products, including time, savings, and demand deposits, safe deposit, and automated transaction machine services. It also provides commercial lending products, such as business, industry, agricultural, construction, inventory, and real estate loans; and consumer loans comprising direct and indirect loans to consumers and purchasers of residential and real properties. In addition, the company offers alternative investment products, which include annuities and mutual funds; and sells insurance policies, such as life and health for commercial and consumer clients. Further, it provides trust and wealth management services. ChoiceOne Financial Services, Inc. was founded in 1898 and is headquartered in Sparta, Michigan.