Financial Contrast: SmartFinancial (NASDAQ:SMBK) versus First United (NASDAQ:FUNC)

SmartFinancial (NASDAQ:SMBK) and First United (NASDAQ:FUNC) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, profitability, institutional ownership and valuation.

Profitability

This table compares SmartFinancial and First United’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SmartFinancial	12.67%	7.33%	0.71%
First United	20.05%	13.69%	1.36%

Dividends

SmartFinancial pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. First United pays an annual dividend of $1.04 per share and has a dividend yield of 2.4%. SmartFinancial pays out 10.6% of its earnings in the form of a dividend. First United pays out 26.9% 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. SmartFinancial has raised its dividend for 3 consecutive years and First United has raised its dividend for 6 consecutive years. First United is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares SmartFinancial and First United”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SmartFinancial	$210.19 million	4.21	$36.14 million	$3.39	15.27
First United	$121.42 million	2.27	$24.51 million	$3.86	11.08

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

Institutional and Insider Ownership

58.8% of SmartFinancial shares are owned by institutional investors. Comparatively, 33.3% of First United shares are owned by institutional investors. 6.9% of SmartFinancial shares are owned by company insiders. Comparatively, 8.1% of First United shares are owned 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.

Analyst Ratings

This is a summary of recent recommendations and price targets for SmartFinancial and First United, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SmartFinancial	0	4	2	1	2.57
First United	0	0	3	0	3.00

SmartFinancial currently has a consensus price target of $50.42, indicating a potential downside of 2.62%. First United has a consensus price target of $49.50, indicating a potential upside of 15.75%. Given First United’s stronger consensus rating and higher possible upside, analysts plainly believe First United is more favorable than SmartFinancial.

Risk & Volatility

SmartFinancial has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, First United has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Summary

First United beats SmartFinancial on 10 of the 18 factors compared between the two stocks.

About SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, and Florida. It operates through Commercial Real Estate, Consumer Real Estate, Construction and Land Development, Commercial and Industrial, Leases, and Consumer and Other segments. The company offers noninterest-bearing and interest-bearing checking, interest-bearing demand, savings, money market, time deposit, individual retirement accounts, as well as certificates of deposit. It also provides commercial and residential real estate, consumer real estate, and construction and land development loans; commercial and financial loans and leases; commercial business and mortgage loans; and direct consumer installment, educational, agriculture, and other revolving credit loans; equipment financing, heavy equipment, semis, and trailers loans and leases to small and mid-size companies; letters of credit; and overdraft facilities. In addition, the company offers wealth management, insurance, mortgage origination, and internet and mobile banking services. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.

About First United

First United Corporation operates as the bank holding company for First United Bank & Trust that provides various retail and commercial banking services to businesses and individuals. It offers various deposit products, which includes checking, savings, money market deposit, and regular and individual retirement accounts (IRAs), as well as certificates of deposit. The company loan portfolio includes commercial loans secured by real estate, commercial equipment, vehicles, or other assets of the borrower; commercial real estate loans for residential and commercial development, agricultural purpose properties, and service industry buildings, such as restaurants and motels, retail buildings, and general purpose business space; residential mortgage loans; home equity lines of credit; residential real estate construction loans; and indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. It also offers access to multi-million-dollar certificates of deposit and the Intrafi cash service, including multi-million-dollar savings and demand deposits to municipalities, businesses, and consumers; and treasury management, cash sweep, and various checking services. In addition, the company provides trust services, which includes personal trust, investment agency accounts, charitable trusts, retirement accounts, including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration, and estate planning; and insurance products, brokerage services, and safe deposit and night depository facilities. First United Corporation was founded in 1900 and is headquartered in Oakland, Maryland.