Financial Analysis: Berkshire Hills Bancorp (NYSE:BHLB) & Pathfinder Bancorp (NASDAQ:PBHC)

Berkshire Hills Bancorp (NYSE:BHLB) and Pathfinder Bancorp (NASDAQ:PBHC) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Insider and Institutional Ownership

83.1% of Berkshire Hills Bancorp shares are held by institutional investors. Comparatively, 26.7% of Pathfinder Bancorp shares are held by institutional investors. 1.0% of Berkshire Hills Bancorp shares are held by insiders. Comparatively, 22.4% of Pathfinder Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Berkshire Hills Bancorp and Pathfinder Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Berkshire Hills Bancorp	$696.05 million	1.71	$61.00 million	$2.47	10.40
Pathfinder Bancorp	$87.92 million	0.81	$3.38 million	$0.67	22.37

Berkshire Hills Bancorp has higher revenue and earnings than Pathfinder Bancorp. Berkshire Hills Bancorp is trading at a lower price-to-earnings ratio than Pathfinder Bancorp, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Berkshire Hills Bancorp has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, Pathfinder Bancorp has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500.

Profitability

This table compares Berkshire Hills Bancorp and Pathfinder Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Berkshire Hills Bancorp	15.93%	9.45%	0.92%
Pathfinder Bancorp	5.23%	3.75%	0.31%

Analyst Ratings

This is a summary of recent recommendations for Berkshire Hills Bancorp and Pathfinder Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Berkshire Hills Bancorp	0	2	0	2	3.00
Pathfinder Bancorp	0	0	0	0	0.00

Berkshire Hills Bancorp currently has a consensus price target of $32.75, indicating a potential upside of 27.48%. Given Berkshire Hills Bancorp’s stronger consensus rating and higher probable upside, equities analysts plainly believe Berkshire Hills Bancorp is more favorable than Pathfinder Bancorp.

Dividends

Berkshire Hills Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 2.8%. Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.7%. Berkshire Hills Bancorp pays out 29.1% of its earnings in the form of a dividend. Pathfinder Bancorp pays out 59.7% 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. Pathfinder Bancorp has raised its dividend for 1 consecutive years. Berkshire Hills Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Berkshire Hills Bancorp beats Pathfinder Bancorp on 14 of the 17 factors compared between the two stocks.

About Berkshire Hills Bancorp

Berkshire Hills Bancorp, Inc. operates as the bank holding company for Berkshire Bank that provides various banking products and services in the United States. The company provides various deposit accounts, including demand deposit, interest-bearing checking, regular savings, money market savings, time certificates of deposit, and retirement deposit accounts. It offers loans, such as commercial real estate, commercial and industrial, residential mortgage, and consumer loans. In addition, the company provides wealth management services comprising investment management, trust administration, tax return preparation, and financial planning; and investment products and brokerage services. Further, it offers commercial cash management, online banking and mobile banking, small business banking, and asset based lending services; and debit cards and other electronic fee producing payment services to transaction account customers. It serves its products to personal, commercial, non-profit, and municipal deposit customers. Berkshire Hills Bancorp, Inc. was founded in 1846 and is headquartered in Boston, Massachusetts.

About Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.