Analyzing Freedom Financial (OTCMKTS:FDVA) and Bankwell Financial Group (NASDAQ:BWFG)

Bankwell Financial Group (NASDAQ:BWFG) and Freedom Financial (OTCMKTS:FDVA) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, earnings, valuation and risk.

Analyst Ratings

This is a summary of recent ratings and price targets for Bankwell Financial Group and Freedom Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bankwell Financial Group	0	2	2	0	2.50
Freedom Financial	0	0	0	0	0.00

Bankwell Financial Group presently has a consensus price target of $52.00, indicating a potential upside of 3.15%. Given Bankwell Financial Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Bankwell Financial Group is more favorable than Freedom Financial.

Valuation and Earnings

This table compares Bankwell Financial Group and Freedom Financial”s 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	1.93	$35.20 million	$4.98	10.12
Freedom Financial	$63.61 million	1.37	$380,000.00	($0.07)	-174.29

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

Profitability

This table compares Bankwell Financial Group and Freedom Financial’s 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%
Freedom Financial	-0.78%	-0.57%	-0.05%

Volatility and Risk

Bankwell Financial Group has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, Freedom Financial has a beta of 0.08, suggesting that its stock price is 92% less volatile than the S&P 500.

Institutional & Insider Ownership

35.8% of Bankwell Financial Group shares are owned by institutional investors. 21.0% of Bankwell Financial Group shares are owned by company insiders. Comparatively, 13.3% of Freedom Financial 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.

Summary

Bankwell Financial Group beats Freedom Financial on 14 of the 14 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 Freedom Financial

Freedom Financial Holdings, Inc. operates as the bank holding company for The Freedom Bank of Virginia that provides commercial banking, personal banking, and mortgage banking solutions. The company offers personal and business checking accounts, interest bearing business savings accounts, money market accounts, personal savings accounts, certificates of deposits, and IRAs, as well as insured cash sweep and certificate of deposit account registry services. It also provides business term, personal, and mortgage loans; commercial lines of credit; commercial real estate mortgage and small business lending services; home equity lines; and credit cards. In addition, the company offers treasury management, online and mobile banking, remote deposit capture, ACH, and wire transfer services; business valuation, bank-at-work, and merchant services; and prestige banking services. The company was founded in 2001 and is headquartered in Fairfax, Virginia.