Reviewing Norwood Financial (NASDAQ:NWFL) & Northeast Community Bancorp (NASDAQ:NECB)

Norwood Financial (NASDAQ:NWFL) and Northeast Community Bancorp (NASDAQ:NECB) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Dividends

Norwood Financial pays an annual dividend of $1.28 per share and has a dividend yield of 4.2%. Northeast Community Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 3.1%. Norwood Financial pays out 47.2% of its earnings in the form of a dividend. Northeast Community Bancorp pays out 24.8% 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. Norwood Financial has increased its dividend for 7 consecutive years and Northeast Community Bancorp has increased its dividend for 2 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Norwood Financial and Northeast Community Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norwood Financial	17.75%	12.43%	1.21%
Northeast Community Bancorp	28.16%	12.62%	2.16%

Institutional & Insider Ownership

28.1% of Norwood Financial shares are held by institutional investors. Comparatively, 53.3% of Northeast Community Bancorp shares are held by institutional investors. 8.1% of Norwood Financial shares are held by company insiders. Comparatively, 7.1% of Northeast Community Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Norwood Financial has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Northeast Community Bancorp has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

Valuation & Earnings

This table compares Norwood Financial and Northeast Community Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norwood Financial	$136.15 million	2.46	$27.75 million	$2.71	11.35
Northeast Community Bancorp	$158.21 million	2.25	$44.41 million	$3.22	7.99

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

Analyst Recommendations

This is a summary of current ratings for Norwood Financial and Northeast Community Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norwood Financial	0	2	1	0	2.33
Northeast Community Bancorp	0	1	1	1	3.00

Norwood Financial presently has a consensus target price of $33.00, suggesting a potential upside of 7.25%. Given Norwood Financial’s higher possible upside, analysts clearly believe Norwood Financial is more favorable than Northeast Community Bancorp.

Summary

Northeast Community Bancorp beats Norwood Financial on 10 of the 17 factors compared between the two stocks.

About Norwood Financial

Norwood Financial Corp. operates as the bank holding company for Wayne Bank that provides various banking products and services. The company accepts a range of deposit products, including interest-bearing and non-interest-bearing transaction accounts, and statement savings and money market accounts, as well as certificate of deposits. It also provides commercial loans comprising lines of credit, revolving credit, term loans, mortgages, secured lending products, and letter of credit facilities; municipal finance lending; construction loans for commercial construction projects and single-family residences; land loans; construction financing; consumer loans; mortgage lending to finance principal residences and second home dwellings; and indirect dealer financing of new and used automobiles, boats, and recreational vehicles. In addition, the company offers investment securities services; personal and business credit services; trust and investment products; and cash management, direct deposit, remote deposit capture, mobile deposit capture, automated clearing house activity, real estate settlement, and Internet and mobile banking services. Further, it engages in the annuity and mutual fund sale, and discount brokerage activities, as well as insurance agency business. The company serves consumers, businesses, nonprofit organizations, and municipalities. It operates branches in Northeastern Pennsylvania; and in Delaware, Sullivan, Ontario, Otsego, and Yates Counties, New York, as well as automated teller machines. Norwood Financial Corp. was founded in 1870 and is headquartered in Honesdale, Pennsylvania.

About Northeast Community Bancorp

Northeast Community Bancorp, Inc. operates as the holding company for NorthEast Community Bank that provides financial services for individuals and businesses. It accepts various deposit instruments, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts, as well as certificates of deposits. The company also offers construction, commercial and industrial, multifamily and mixed-use real estate, non-residential real estate loans, and consumer loans. In addition, it invests in various types of liquid assets, including U.S. Treasury obligations, municipal securities, deposits at the Federal Home Loan Bank of New York, and certificates of deposit of federally insured institutions, as well as securities of various federal agencies, and of state and municipal governments. Further, the company offers financial planning and investment advisory services; and life insurance products and fixed-rate annuities. It operates full-service branches located in Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts; and loan production offices located in White Plains, New York, and New City counties in New York and Danvers, Massachusetts. Northeast Community Bancorp, Inc. was founded in 1934 and is headquartered in White Plains, New York.