Financial Review: Eagle Financial Services (NASDAQ:EFSI) and C&F Financial (NASDAQ:CFFI)

Eagle Financial Services (NASDAQ:EFSI) and C&F Financial (NASDAQ:CFFI) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Earnings & Valuation

This table compares Eagle Financial Services and C&F Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Financial Services	$105.89 million	2.13	$8.21 million	$3.52	11.86
C&F Financial	$186.13 million	1.37	$26.83 million	$8.70	9.01

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

Insider & Institutional Ownership

0.3% of Eagle Financial Services shares are held by institutional investors. Comparatively, 37.2% of C&F Financial shares are held by institutional investors. 7.1% of Eagle Financial Services shares are held by insiders. Comparatively, 6.4% of C&F Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Eagle Financial Services pays an annual dividend of $1.24 per share and has a dividend yield of 3.0%. C&F Financial pays an annual dividend of $1.92 per share and has a dividend yield of 2.5%. Eagle Financial Services pays out 35.2% of its earnings in the form of a dividend. C&F Financial pays out 22.1% 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. Eagle Financial Services has raised its dividend for 14 consecutive years and C&F Financial has raised its dividend for 1 consecutive years. Eagle Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Eagle Financial Services and C&F Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Financial Services	1	1	2	1	2.60
C&F Financial	0	1	0	0	2.00

Eagle Financial Services currently has a consensus price target of $42.25, suggesting a potential upside of 1.22%. Given Eagle Financial Services’ stronger consensus rating and higher possible upside, equities analysts plainly believe Eagle Financial Services is more favorable than C&F Financial.

Volatility & Risk

Eagle Financial Services has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500. Comparatively, C&F Financial has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500.

Profitability

This table compares Eagle Financial Services and C&F Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Financial Services	15.81%	10.17%	0.98%
C&F Financial	14.84%	11.03%	1.03%

Summary

Eagle Financial Services beats C&F Financial on 10 of the 18 factors compared between the two stocks.

About Eagle Financial Services

Eagle Financial Services, Inc. operates as the bank holding company for Bank of Clarke County that provides various retail and commercial banking products and services in the Shenandoah Valley and Northern Virginia. The company’s deposit products include checking, NOW, money market, and regular savings accounts; and demand and time deposits. Its loan portfolio comprises one-to-four-family residential real estate, commercial real estate, construction and land development, and commercial and industrial loans, as well as secured and unsecured consumer loans, which include personal installment loans, personal lines of credit, automobile loans, and credit card loans. The company also offers personal and retirement plan services; investment services comprising tax-deferred annuities, IRAs and rollovers, mutual funds, retirement plans, college savings plans, life insurance, long term care insurance, fixed income investing, brokerage CDs, and full service or discount brokerage services; non-deposit investment products; and title insurance products. In addition, it provides ATM and debit cards; and telephone, internet, and mobile banking services, as well as other commercial deposit account services, such as ACH origination and remote deposit capture services. The company operates through twelve full-service branches, two loan production offices, one wealth management office, and one drive-through only facility, as well as 13 ATM locations in the Virginia communities of Berryville, Winchester, Boyce, Stephens City, Purcellville, Warrenton, Leesburg, Ashburn, and Fairfax. Eagle Financial Services, Inc. was founded in 1881 and is headquartered in Berryville, Virginia.

About C&F Financial

C&F Financial Corp. is a bank holding company, which engages in the provision of banking services to individuals and businesses. It operates through the following segments: Community Banking, Mortgage Banking and Consumer Finance. The Community Banking segment provides checking and savings deposit accounts, business, real estate, development, mortgage, home equity, and installment loans. The Mortgage Banking segment offers ancillary mortgage loan origination services for loan settlement and residential appraisals. The Consumer Finance segment consists of automobile financing through lending programs that are designed to serve customers in the non-prime market who have limited access to traditional automobile financing. The company was founded on March 8, 1994 and is headquartered in Toano, VA.