Eastern Bankshares (NASDAQ:EBC) and Bankwell Financial Group (NASDAQ:BWFG) Critical Survey

Eastern Bankshares (NASDAQ:EBC) and Bankwell Financial Group (NASDAQ:BWFG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Dividends

Eastern Bankshares pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Eastern Bankshares pays out 33.7% of its earnings in the form of a dividend. Bankwell Financial Group pays out 16.1% 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. Eastern Bankshares has increased its dividend for 5 consecutive years. Eastern Bankshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Eastern Bankshares	26.28%	8.42%	1.21%
Bankwell Financial Group	18.71%	13.31%	1.20%

Institutional & Insider Ownership

71.7% of Eastern Bankshares shares are held by institutional investors. Comparatively, 35.8% of Bankwell Financial Group shares are held by institutional investors. 1.3% of Eastern Bankshares shares are held by company insiders. Comparatively, 21.0% of Bankwell Financial Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Eastern Bankshares has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Bankwell Financial Group has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Earnings & Valuation

This table compares Eastern Bankshares and Bankwell Financial Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eastern Bankshares	$1.06 billion	4.69	$88.22 million	$1.78	12.04
Bankwell Financial Group	$207.71 million	2.22	$35.20 million	$4.98	11.60

Eastern Bankshares has higher revenue and earnings than Bankwell Financial Group. Bankwell Financial Group is trading at a lower price-to-earnings ratio than Eastern Bankshares, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Eastern Bankshares and Bankwell Financial Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eastern Bankshares	0	2	6	1	2.89
Bankwell Financial Group	0	2	2	0	2.50

Eastern Bankshares presently has a consensus target price of $22.92, suggesting a potential upside of 6.94%. Bankwell Financial Group has a consensus target price of $52.00, suggesting a potential downside of 10.00%. Given Eastern Bankshares’ stronger consensus rating and higher possible upside, analysts clearly believe Eastern Bankshares is more favorable than Bankwell Financial Group.

Summary

Eastern Bankshares beats Bankwell Financial Group on 14 of the 18 factors compared between the two stocks.

About Eastern Bankshares

Eastern Bankshares, Inc. operates as the bank holding company for Eastern Bank that provides banking products and services primarily to retail, commercial, and small business customers. The company provides deposit accounts, interest checking accounts, money market accounts, savings accounts, and time certificates of deposit accounts. It also offers commercial and industrial, commercial real estate and construction, small business, residential real estate, and home equity loans; lines of credit; and other consumer loans comprising unsecured personal lines of credit, overdraft protection, automobile loans, home improvement loans, airplane loans, and other personal loans. In addition, the company provides trust, financial planning and portfolio management, automated lock box collection, cash management, and account reconciliation services; personal, business, and employee benefits insurance products. Eastern Bankshares, Inc. was founded in 1818 and is headquartered in Boston, Massachusetts.

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.