Analyzing Franklin Financial Services (NASDAQ:FRAF) and CNB Financial (NASDAQ:CCNE)

Franklin Financial Services (NASDAQ:FRAF) and CNB Financial (NASDAQ:CCNE) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, earnings, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of recent recommendations for Franklin Financial Services and CNB Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Financial Services	0	0	0	0	0.00
CNB Financial	0	1	1	0	2.50

CNB Financial has a consensus price target of $27.75, indicating a potential upside of 5.47%. Given CNB Financial’s stronger consensus rating and higher possible upside, analysts clearly believe CNB Financial is more favorable than Franklin Financial Services.

Earnings and Valuation

This table compares Franklin Financial Services and CNB Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Financial Services	$115.13 million	1.82	$11.10 million	$3.26	14.33
CNB Financial	$364.58 million	2.13	$54.58 million	$2.38	11.05

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

Profitability

This table compares Franklin Financial Services and CNB Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Financial Services	11.78%	9.64%	0.65%
CNB Financial	14.56%	9.79%	0.89%

Institutional and Insider Ownership

24.8% of Franklin Financial Services shares are owned by institutional investors. Comparatively, 52.4% of CNB Financial shares are owned by institutional investors. 7.4% of Franklin Financial Services shares are owned by insiders. Comparatively, 2.9% of CNB Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Franklin Financial Services pays an annual dividend of $1.32 per share and has a dividend yield of 2.8%. CNB Financial pays an annual dividend of $0.72 per share and has a dividend yield of 2.7%. Franklin Financial Services pays out 40.5% of its earnings in the form of a dividend. CNB Financial pays out 30.3% 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. Franklin Financial Services has raised its dividend for 1 consecutive years and CNB Financial has raised its dividend for 1 consecutive years.

Risk and Volatility

Franklin Financial Services has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500. Comparatively, CNB Financial has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Summary

CNB Financial beats Franklin Financial Services on 12 of the 16 factors compared between the two stocks.

About Franklin Financial Services

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.

About CNB Financial

CNB Financial Corporation operates as the bank holding company for CNB Bank that provides a range of banking products and services for individual, business, governmental, and institutional customers. The company accepts checking, savings, and time deposit accounts; and offers real estate, commercial, industrial, residential, and consumer loans, as well as various other specialized financial services. It also provides private banking; and wealth and asset management services, including the administration of trusts and estates, retirement plans, and other employee benefit plans, as well as a range of wealth management services. In addition, the company invests in debt and equity securities; sells nonproprietary annuities and other insurance products; and offers small balance unsecured loans and secured loans primarily collateralized by automobiles and equipment, as well as engages in consumer discount loan and finance business. The company was founded in 1865 and is headquartered in Clearfield, Pennsylvania.