Summit Financial Group (NASDAQ:SMMF) and Unity Bancorp (NASDAQ:UNTY) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.
Volatility and Risk
Summit Financial Group has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Unity Bancorp has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.
Summit Financial Group pays an annual dividend of $0.60 per share and has a dividend yield of 2.4%. Unity Bancorp pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. Summit Financial Group pays out 26.5% of its earnings in the form of a dividend. Unity Bancorp pays out 15.9% 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. Summit Financial Group has raised its dividend for 2 consecutive years and Unity Bancorp has raised its dividend for 5 consecutive years.
This table compares Summit Financial Group and Unity Bancorp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Summit Financial Group||25.07%||13.38%||1.37%|
Valuation and Earnings
This table compares Summit Financial Group and Unity Bancorp’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Summit Financial Group||$112.83 million||2.79||$28.07 million||$2.26||11.16|
|Unity Bancorp||$76.29 million||3.04||$21.92 million||$2.01||10.62|
Summit Financial Group has higher revenue and earnings than Unity Bancorp. Unity Bancorp is trading at a lower price-to-earnings ratio than Summit Financial Group, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
26.5% of Summit Financial Group shares are owned by institutional investors. Comparatively, 50.8% of Unity Bancorp shares are owned by institutional investors. 2.6% of Summit Financial Group shares are owned by company insiders. Comparatively, 29.7% of Unity Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
This is a breakdown of current ratings and target prices for Summit Financial Group and Unity Bancorp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Summit Financial Group||0||0||0||0||N/A|
Unity Bancorp has a consensus target price of $24.00, suggesting a potential upside of 12.41%. Given Unity Bancorp’s higher probable upside, analysts plainly believe Unity Bancorp is more favorable than Summit Financial Group.
Unity Bancorp beats Summit Financial Group on 10 of the 16 factors compared between the two stocks.
Summit Financial Group Company Profile
Summit Financial Group, Inc. operates as a financial holding company for Summit Community Bank, Inc. that provides community banking and other financial services to individuals and businesses primarily in the Eastern Panhandle and South Central regions of West Virginia and the Shenandoah Valley, and Southwestern regions of Virginia. The company operates through three segments: Community Banking, Trust and Wealth Management, and Insurance. Its community banking services include demand, savings, and time deposits; commercial, commercial real estate, construction and land development, residential real estate, and consumer loans; and mortgage warehouse lines of credit, as well as trust and wealth management, and cash management services. The company also offers insurance brokerage services, such as corporate and personal property and casualty insurance products, as well as group health and life insurance products, and consulting services. It operates thirty banking locations. Summit Financial Group, Inc. was founded in 1987 and is headquartered in Moorefield, West Virginia.
Unity Bancorp Company Profile
Unity Bancorp, Inc. operates as the holding company for Unity Bank that provides a range of banking products and services to individuals, small and medium sized businesses, and professional communities. The company offers personal and business checking accounts, time deposits, money market accounts, and regular savings accounts. It also provides commercial, small business administration, consumer, mortgage, home equity, and personal loans. As of December 31, 2018, the company offered its financial services through 19 branch offices located in Bergen, Hunterdon, Middlesex, Somerset, Union, and Warren Counties in New Jersey, as well as Northampton County, Pennsylvania. Unity Bancorp, Inc. was founded in 1991 and is headquartered in Clinton, New Jersey.
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