Critical Contrast: Burke & Herbert Financial Services (NASDAQ:BHRB) versus Hawthorn Bancshares (NASDAQ:HWBK)

Hawthorn Bancshares (NASDAQ:HWBK) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of current ratings for Hawthorn Bancshares and Burke & Herbert Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hawthorn Bancshares	0	0	1	0	3.00
Burke & Herbert Financial Services	0	3	2	1	2.67

Burke & Herbert Financial Services has a consensus target price of $75.25, indicating a potential upside of 6.54%. Given Burke & Herbert Financial Services’ higher probable upside, analysts plainly believe Burke & Herbert Financial Services is more favorable than Hawthorn Bancshares.

Dividends

Hawthorn Bancshares pays an annual dividend of $0.84 per share and has a dividend yield of 2.2%. Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.1%. Hawthorn Bancshares pays out 22.0% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 35.3% 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. Hawthorn Bancshares has increased its dividend for 5 consecutive years and Burke & Herbert Financial Services has increased its dividend for 1 consecutive years.

Profitability

This table compares Hawthorn Bancshares and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hawthorn Bancshares	22.77%	15.15%	1.42%
Burke & Herbert Financial Services	18.86%	13.66%	1.46%

Earnings & Valuation

This table compares Hawthorn Bancshares and Burke & Herbert Financial Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hawthorn Bancshares	$111.97 million	2.39	$23.80 million	$3.82	10.14
Burke & Herbert Financial Services	$491.11 million	2.90	$117.31 million	$6.24	11.32

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

Insider & Institutional Ownership

30.7% of Hawthorn Bancshares shares are held by institutional investors. 22.9% of Hawthorn Bancshares shares are held by company insiders. Comparatively, 12.0% of Burke & Herbert Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Hawthorn Bancshares has a beta of 0.45, indicating that its stock price is 55% less volatile than the S&P 500. Comparatively, Burke & Herbert Financial Services has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Summary

Burke & Herbert Financial Services beats Hawthorn Bancshares on 11 of the 18 factors compared between the two stocks.

About Hawthorn Bancshares

Hawthorn Bancshares, Inc. operates as the bank holding company for Hawthorn Bank that provides various banking services in the United States. It accepts checking, savings, money market, individual retirement, and other time deposit accounts, as well as certificates of deposit. The company also offers commercial and industrial, single payment personal, installment, commercial and residential real estate, and consumer loans, as well as equipment, operating, and small business administration loans; and debit and credit cards. In addition, it provides trust services that include estate planning, investment, and asset management services; and cash management, safety deposit box, brokerage, and Internet banking services. Hawthorn Bancshares, Inc. was founded in 1865 and is headquartered in Jefferson City, Missouri.

About Burke & Herbert Financial Services

Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.