Reviewing Citizens (NASDAQ:CIZN) and Norwood Financial (NASDAQ:NWFL)

Norwood Financial (NASDAQ:NWFL) and Citizens (NASDAQ:CIZN) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Profitability

This table compares Norwood Financial and Citizens’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norwood Financial	18.68%	12.88%	1.27%
Citizens	7.00%	11.28%	0.37%

Analyst Recommendations

This is a summary of current ratings and price targets for Norwood Financial and Citizens, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norwood Financial	0	1	1	0	2.50
Citizens	0	0	3	0	3.00

Norwood Financial presently has a consensus price target of $35.00, indicating a potential upside of 1.48%. Citizens has a consensus price target of $19.50, indicating a potential upside of 77.76%. Given Citizens’ stronger consensus rating and higher probable upside, analysts plainly believe Citizens is more favorable than Norwood Financial.

Volatility and Risk

Norwood Financial has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Citizens has a beta of 0.05, indicating that its stock price is 95% less volatile than the S&P 500.

Insider and Institutional Ownership

28.1% of Norwood Financial shares are held by institutional investors. Comparatively, 9.7% of Citizens shares are held by institutional investors. 8.1% of Norwood Financial shares are held by company insiders. Comparatively, 8.9% of Citizens shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Norwood Financial and Citizens”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norwood Financial	$102.51 million	3.67	$27.75 million	$2.90	11.89
Citizens	$40.95 million	1.53	$5.49 million	$1.68	6.53

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

Dividends

Norwood Financial pays an annual dividend of $1.28 per share and has a dividend yield of 3.7%. Citizens pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. Norwood Financial pays out 44.1% of its earnings in the form of a dividend. Citizens pays out 4.8% 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. Norwood Financial has increased its dividend for 7 consecutive years and Citizens has increased its dividend for 1 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Norwood Financial beats Citizens on 12 of the 17 factors compared between the two stocks.

About Norwood Financial

Norwood Financial Corp. operates as the bank holding company for Wayne Bank that provides various banking products and services. The company accepts a range of deposit products, including interest-bearing and non-interest-bearing transaction accounts, and statement savings and money market accounts, as well as certificate of deposits. It also provides commercial loans comprising lines of credit, revolving credit, term loans, mortgages, secured lending products, and letter of credit facilities; municipal finance lending; construction loans for commercial construction projects and single-family residences; land loans; construction financing; consumer loans; mortgage lending to finance principal residences and second home dwellings; and indirect dealer financing of new and used automobiles, boats, and recreational vehicles. In addition, the company offers investment securities services; personal and business credit services; trust and investment products; and cash management, direct deposit, remote deposit capture, mobile deposit capture, automated clearing house activity, real estate settlement, and Internet and mobile banking services. Further, it engages in the annuity and mutual fund sale, and discount brokerage activities, as well as insurance agency business. The company serves consumers, businesses, nonprofit organizations, and municipalities. It operates branches in Northeastern Pennsylvania; and in Delaware, Sullivan, Ontario, Otsego, and Yates Counties, New York, as well as automated teller machines. Norwood Financial Corp. was founded in 1870 and is headquartered in Honesdale, Pennsylvania.

About Citizens

Citizens Holding Company operates as the bank holding company for The Citizens Bank of Philadelphia that provides various commercial and personal banking products and services. It offers demand deposits; and savings and time deposit accounts. The company also provides secured and unsecured loans; mortgage loans; single and multi-family housing, farm, residential and commercial construction, and commercial real estate loans; commercial, industrial, and agricultural production loans; and consumer loans, as well as issues letters of credit. In addition, it offers personal and corporate trust services; credit life and title insurance; and online and mobile banking services. The company was founded in 1908 and is headquartered in Philadelphia, Mississippi.