Financial Analysis: Towne Bank (NASDAQ:TOWN) versus Camden National (NASDAQ:CAC)

Camden National (NASDAQ:CAC) and Towne Bank (NASDAQ:TOWN) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, profitability, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares Camden National and Towne Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Camden National	$373.18 million	2.62	$65.16 million	$5.22	11.08
Towne Bank	$1.12 billion	2.57	$169.53 million	$3.56	10.21

Towne Bank has higher revenue and earnings than Camden National. Towne Bank is trading at a lower price-to-earnings ratio than Camden National, indicating that it is currently the more affordable of the two stocks.

Dividends

Camden National pays an annual dividend of $1.68 per share and has a dividend yield of 2.9%. Towne Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.1%. Camden National pays out 32.2% of its earnings in the form of a dividend. Towne Bank pays out 31.5% 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. Towne Bank has increased its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Camden National and Towne Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Camden National	23.64%	12.59%	1.27%
Towne Bank	25.64%	9.60%	1.22%

Insider and Institutional Ownership

77.4% of Camden National shares are owned by institutional investors. Comparatively, 56.0% of Towne Bank shares are owned by institutional investors. 2.1% of Camden National shares are owned by company insiders. Comparatively, 8.1% of Towne Bank shares are owned 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

Camden National has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, Towne Bank has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Camden National and Towne Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Camden National	0	4	2	0	2.33
Towne Bank	0	2	1	1	2.75

Camden National presently has a consensus price target of $56.50, indicating a potential downside of 2.28%. Towne Bank has a consensus price target of $39.50, indicating a potential upside of 8.64%. Given Towne Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Towne Bank is more favorable than Camden National.

Summary

Towne Bank beats Camden National on 11 of the 18 factors compared between the two stocks.

About Camden National

Camden National Corporation operates as the bank holding company for Camden National Bank that provides various commercial and consumer banking products and services for consumer, institutional, municipal, non-profit, and commercial customers in Maine, New Hampshire, and Massachusetts. The company accepts checking, savings, time, and brokered deposits, as well as deposits with the certificate of deposit account registry system. Its loan products include non-owner-occupied commercial estate loans, owner-occupied commercial real estate loans, unsecured fully-guaranteed commercial loans backed by the small business administration, loans secured by one-to four-family properties, and consumer and home equity loans. The company also provides brokerage and insurance services through its financial offerings consisting of college, retirement, estate planning, mutual funds, strategic asset management accounts, and variable and fixed annuities. Further, it offers a range of fiduciary and asset management, wealth management, investment management, financial planning, and trustee services. Camden National Corporation was founded in 1875 and is headquartered in Camden, Maine.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.