Head-To-Head Review: Western New England Bancorp (NASDAQ:WNEB) and VersaBank (NASDAQ:VBNK)

VersaBank (NASDAQ:VBNK) and Western New England Bancorp (NASDAQ:WNEB) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, risk, earnings, dividends and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for VersaBank and Western New England Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VersaBank	1	2	1	0	2.00
Western New England Bancorp	0	2	0	0	2.00

VersaBank presently has a consensus target price of $13.00, indicating a potential downside of 17.56%. Western New England Bancorp has a consensus target price of $11.00, indicating a potential downside of 13.73%. Given Western New England Bancorp’s higher possible upside, analysts clearly believe Western New England Bancorp is more favorable than VersaBank.

Earnings & Valuation

This table compares VersaBank and Western New England Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VersaBank	$217.14 million	2.32	$20.32 million	$0.65	24.26
Western New England Bancorp	$122.74 million	2.13	$11.67 million	$0.66	19.32

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

Profitability

This table compares VersaBank and Western New England Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VersaBank	9.33%	7.02%	0.69%
Western New England Bancorp	10.33%	5.58%	0.49%

Institutional & Insider Ownership

56.9% of VersaBank shares are owned by institutional investors. Comparatively, 68.0% of Western New England Bancorp shares are owned by institutional investors. 6.1% of Western New England Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

VersaBank has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Western New England Bancorp has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.

Dividends

VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. Western New England Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 2.2%. VersaBank pays out 10.8% of its earnings in the form of a dividend. Western New England Bancorp pays out 42.4% 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.

Summary

VersaBank beats Western New England Bancorp on 9 of the 15 factors compared between the two stocks.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

About Western New England Bancorp

Western New England Bancorp, Inc. operates as the holding company for Westfield Bank that provides a range of commercial and retail banking products and services to individuals and businesses. The company accepts various deposit accounts, including interest-bearing and noninterest-bearing checking, commercial checking, business, nonprofit and municipal checking, savings, money market and sweep, individual retirement, and other savings accounts; time deposits; certificates of deposit; and interest on lawyer's trust accounts. It also offers residential real estate loans, including first mortgages, home equity loans, and home equity lines, and secured by one-to-four family residential properties; commercial and industrial loans, such as letters of credit, revolving lines of credit, working capital, equipment financing, and term loans; commercial mortgage loans; construction and land development loans; home equity loans comprising home equity revolving loans and lines of credit; and consumer loans, including automobile, spa and pool, collateral, and personal lines of credit. In addition, the company provides automated teller machine (ATM), telephone and online banking, remote deposit capture, cash management, overdraft and safe deposit facility, and night deposit services. The company was formerly known as Westfield Financial, Inc. and changed its name to Western New England Bancorp, Inc. in October 2016. The company was founded in 1853 and is headquartered in Westfield, Massachusetts.