Hawthorn Bancshares (NASDAQ:HWBK – Get Free Report) and Lake Shore Bancorp (NASDAQ:LSBK – Get Free Report) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.
Risk & Volatility
Hawthorn Bancshares has a beta of 0.45, indicating that its stock price is 55% less volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500.
Valuation and Earnings
This table compares Hawthorn Bancshares and Lake Shore Bancorp”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Hawthorn Bancshares | $111.97 million | 2.47 | $23.80 million | $3.82 | 10.49 |
| Lake Shore Bancorp | $39.56 million | 3.45 | $7.27 million | $1.13 | 15.38 |
Hawthorn Bancshares has higher revenue and earnings than Lake Shore Bancorp. Hawthorn Bancshares is trading at a lower price-to-earnings ratio than Lake Shore Bancorp, indicating that it is currently the more affordable of the two stocks.
Dividends
Hawthorn Bancshares pays an annual dividend of $0.84 per share and has a dividend yield of 2.1%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.1%. Hawthorn Bancshares pays out 22.0% of its earnings in the form of a dividend. Lake Shore Bancorp pays out 31.9% 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. Hawthorn Bancshares has raised its dividend for 5 consecutive years. Hawthorn Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
30.7% of Hawthorn Bancshares shares are held by institutional investors. Comparatively, 8.7% of Lake Shore Bancorp shares are held by institutional investors. 22.9% of Hawthorn Bancshares shares are held by company insiders. Comparatively, 8.4% of Lake Shore 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.
Analyst Ratings
This is a summary of recent ratings for Hawthorn Bancshares and Lake Shore Bancorp, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Hawthorn Bancshares | 0 | 0 | 1 | 0 | 3.00 |
| Lake Shore Bancorp | 0 | 1 | 0 | 0 | 2.00 |
Profitability
This table compares Hawthorn Bancshares and Lake Shore Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Hawthorn Bancshares | 22.77% | 15.15% | 1.42% |
| Lake Shore Bancorp | 20.74% | 5.91% | 1.15% |
Summary
Hawthorn Bancshares beats Lake Shore Bancorp on 14 of the 16 factors compared between the two stocks.
About Hawthorn Bancshares
Hawthorn Bancshares, Inc. operates as the bank holding company for Hawthorn Bank that provides various banking services in the United States. It accepts checking, savings, money market, individual retirement, and other time deposit accounts, as well as certificates of deposit. The company also offers commercial and industrial, single payment personal, installment, commercial and residential real estate, and consumer loans, as well as equipment, operating, and small business administration loans; and debit and credit cards. In addition, it provides trust services that include estate planning, investment, and asset management services; and cash management, safety deposit box, brokerage, and Internet banking services. Hawthorn Bancshares, Inc. was founded in 1865 and is headquartered in Jefferson City, Missouri.
About Lake Shore Bancorp
Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.
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