Critical Contrast: Community Heritage Financial (OTCMKTS:CMHF) vs. Bankwell Financial Group (NASDAQ:BWFG)

Bankwell Financial Group (NASDAQ:BWFG) and Community Heritage Financial (OTCMKTS:CMHF) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.

Analyst Ratings

This is a summary of recent ratings and target prices for Bankwell Financial Group and Community Heritage Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bankwell Financial Group	0	2	2	0	2.50
Community Heritage Financial	0	0	0	0	0.00

Bankwell Financial Group currently has a consensus price target of $47.50, indicating a potential upside of 8.55%. Given Bankwell Financial Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Bankwell Financial Group is more favorable than Community Heritage Financial.

Dividends

Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Community Heritage Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. Bankwell Financial Group pays out 22.2% of its earnings in the form of a dividend. Community Heritage Financial pays out 11.7% 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.

Risk and Volatility

Bankwell Financial Group has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Community Heritage Financial has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.

Institutional & Insider Ownership

35.8% of Bankwell Financial Group shares are owned by institutional investors. Comparatively, 12.2% of Community Heritage Financial shares are owned by institutional investors. 19.5% of Bankwell Financial Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Bankwell Financial Group and Community Heritage Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bankwell Financial Group	$195.71 million	1.76	$9.77 million	$3.61	12.12
Community Heritage Financial	$57.30 million	1.50	$8.00 million	$2.73	10.71

Bankwell Financial Group has higher revenue and earnings than Community Heritage Financial. Community Heritage Financial 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.

Profitability

This table compares Bankwell Financial Group and Community Heritage Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bankwell Financial Group	14.10%	10.18%	0.88%
Community Heritage Financial	N/A	N/A	N/A

Summary

Bankwell Financial Group beats Community Heritage Financial on 15 of the 16 factors compared between the two stocks.

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.

About Community Heritage Financial

Community Heritage Financial, Inc. operates as the bank holding company for Middletown Valley Bank that provides retail and commercial banking services to individuals and businesses in Frederick and Washington counties in Maryland and Franklin County, Pennsylvania. Its primary deposit products include demand, savings, and time deposits, as well as lending products comprise real estate mortgages, commercial business loans, and instalment loans. The company also offers mortgage financing, new home purchases, refinancing, and construction lending in Middletown, Crofton, and Oakland, Maryland. The company was founded in 1908 and is based in Middletown, Maryland.