Financial Contrast: Burke & Herbert Financial Services (NASDAQ:BHRB) and First United (NASDAQ:FUNC)

First United (NASDAQ:FUNC) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Earnings & Valuation

This table compares First United and Burke & Herbert Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First United	$79.79 million	2.46	$20.57 million	$3.15	9.64
Burke & Herbert Financial Services	$256.55 million	3.38	$35.71 million	$2.40	24.08

Burke & Herbert Financial Services has higher revenue and earnings than First United. First United is trading at a lower price-to-earnings ratio than Burke & Herbert Financial Services, indicating that it is currently the more affordable of the two stocks.

Dividends

First United pays an annual dividend of $0.88 per share and has a dividend yield of 2.9%. Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.8%. First United pays out 27.9% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 91.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares First United and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First United	18.45%	12.51%	1.11%
Burke & Herbert Financial Services	8.88%	15.15%	1.35%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for First United and Burke & Herbert Financial Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First United	0	0	1	0	3.00
Burke & Herbert Financial Services	0	0	2	0	3.00

First United currently has a consensus price target of $42.00, suggesting a potential upside of 38.29%. Burke & Herbert Financial Services has a consensus price target of $76.00, suggesting a potential upside of 31.51%. Given First United’s higher probable upside, equities research analysts clearly believe First United is more favorable than Burke & Herbert Financial Services.

Institutional and Insider Ownership

33.3% of First United shares are owned by institutional investors. 7.8% of First United shares are owned by company insiders. Comparatively, 9.7% of Burke & Herbert Financial Services 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.

Summary

Burke & Herbert Financial Services beats First United on 9 of the 14 factors compared between the two stocks.

About First United

First United Corporation operates as the bank holding company for First United Bank & Trust that provides various retail and commercial banking services to businesses and individuals. It offers various deposit products, which includes checking, savings, money market deposit, and regular and individual retirement accounts (IRAs), as well as certificates of deposit. The company loan portfolio includes commercial loans secured by real estate, commercial equipment, vehicles, or other assets of the borrower; commercial real estate loans for residential and commercial development, agricultural purpose properties, and service industry buildings, such as restaurants and motels, retail buildings, and general purpose business space; residential mortgage loans; home equity lines of credit; residential real estate construction loans; and indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. It also offers access to multi-million-dollar certificates of deposit and the Intrafi cash service, including multi-million-dollar savings and demand deposits to municipalities, businesses, and consumers; and treasury management, cash sweep, and various checking services. In addition, the company provides trust services, which includes personal trust, investment agency accounts, charitable trusts, retirement accounts, including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration, and estate planning; and insurance products, brokerage services, and safe deposit and night depository facilities. First United Corporation was founded in 1900 and is headquartered in Oakland, Maryland.

About Burke & Herbert Financial Services

Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.