Financial Comparison: Shore Bancshares (NASDAQ:SHBI) versus Bankwell Financial Group (NASDAQ:BWFG)

Bankwell Financial Group (NASDAQ:BWFG) and Shore Bancshares (NASDAQ:SHBI) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, institutional ownership, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Bankwell Financial Group and Shore Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bankwell Financial Group	0	2	2	0	2.50
Shore Bancshares	0	1	3	1	3.00

Bankwell Financial Group currently has a consensus target price of $52.00, indicating a potential downside of 9.42%. Shore Bancshares has a consensus target price of $21.33, indicating a potential downside of 5.10%. Given Shore Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Shore Bancshares is more favorable than Bankwell Financial Group.

Dividends

Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Shore Bancshares pays an annual dividend of $0.56 per share and has a dividend yield of 2.5%. Bankwell Financial Group pays out 16.1% of its earnings in the form of a dividend. Shore Bancshares pays out 29.8% 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.

Insider & Institutional Ownership

35.8% of Bankwell Financial Group shares are owned by institutional investors. Comparatively, 59.8% of Shore Bancshares shares are owned by institutional investors. 21.0% of Bankwell Financial Group shares are owned by company insiders. Comparatively, 8.7% of Shore Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Bankwell Financial Group and Shore Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bankwell Financial Group	18.71%	13.31%	1.20%
Shore Bancshares	18.20%	11.84%	1.12%

Volatility & Risk

Bankwell Financial Group has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Shore Bancshares has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Valuation & Earnings

This table compares Bankwell Financial Group and Shore Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bankwell Financial Group	$207.71 million	2.20	$35.20 million	$4.98	11.53
Shore Bancshares	$342.72 million	2.19	$59.51 million	$1.88	11.96

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

Summary

Shore Bancshares beats Bankwell Financial Group on 10 of the 17 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 Shore Bancshares

Shore Bancshares, Inc. operates as a bank holding company for the Shore United Bank, N.A. that provides various commercial and consumer banking products and services to individuals, businesses, and other organizations. It offers checking, savings, overnight investment sweep, and money market accounts; and regular and IRA certificates of deposit, as well as CDARS programs and cash management services. The company also provides commercial loans, such as secured and unsecured loans, working capital loans, lines of credit, term loans, accounts receivable financing, real estate acquisition and development loans, construction loans, and letters of credit; residential real estate construction loans; residential mortgage loans; and loans to consumers, including home equity, automobile, installment, home improvement, and personal lines of credit, as well as other consumer financing products. In addition, it offers trust, asset management, and financial planning services; treasury management services, such as merchant card processing, remote deposit capture, and ACH origination, as well as telephone, mobile, and Internet banking services; safe deposit boxes; debit and credit cards; and automatic teller machine services. Shore Bancshares, Inc. was founded in 1876 and is headquartered in Easton, Maryland.