American National Bankshares (NASDAQ: AMNB) and DNB Financial Corp (NASDAQ:DNBF) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitabiliy and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations for American National Bankshares and DNB Financial Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American National Bankshares 0 0 1 0 3.00
DNB Financial Corp 0 0 1 0 3.00

American National Bankshares currently has a consensus price target of $39.00, suggesting a potential upside of 0.78%. Given American National Bankshares’ higher probable upside, equities research analysts plainly believe American National Bankshares is more favorable than DNB Financial Corp.

Volatility and Risk

American National Bankshares has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, DNB Financial Corp has a beta of 0.36, indicating that its share price is 64% less volatile than the S&P 500.

Profitability

This table compares American National Bankshares and DNB Financial Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American National Bankshares 23.14% 8.00% 0.98%
DNB Financial Corp 15.27% 8.39% 0.71%

Earnings & Valuation

This table compares American National Bankshares and DNB Financial Corp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American National Bankshares $63.38 million 5.27 $16.15 million $1.87 20.70
DNB Financial Corp $34.14 million 4.15 $6.43 million $1.51 22.05

American National Bankshares has higher revenue and earnings than DNB Financial Corp. American National Bankshares is trading at a lower price-to-earnings ratio than DNB Financial Corp, indicating that it is currently the more affordable of the two stocks.

Dividends

American National Bankshares pays an annual dividend of $0.96 per share and has a dividend yield of 2.5%. DNB Financial Corp pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. American National Bankshares pays out 51.3% of its earnings in the form of a dividend. DNB Financial Corp pays out 18.5% 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.

Institutional and Insider Ownership

34.6% of American National Bankshares shares are owned by institutional investors. Comparatively, 25.6% of DNB Financial Corp shares are owned by institutional investors. 5.8% of American National Bankshares shares are owned by insiders. Comparatively, 18.4% of DNB Financial Corp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

American National Bankshares beats DNB Financial Corp on 11 of the 14 factors compared between the two stocks.

About American National Bankshares

American National Bankshares Inc. is a one-bank holding company. American National Bank and Trust Company (the Bank) is the only banking subsidiary of the Company. The Company operates through two segments: community banking, and trust and investment services. The Community banking segment involves making loans to and generating deposits from individuals and businesses. All assets and liabilities of the Company are allocated to community banking. Investment income from securities is also allocated to the community banking segment. Loan fee income, service charges from deposit accounts and non-deposit fees, such as automated teller machine fees and insurance commissions generate additional income for community banking. Trust and investment services include estate planning, trust account administration, investment management and retail brokerage. The trust and investment services division receives fees for investment and administrative services.

About DNB Financial Corp

DNB Financial Corporation is a bank holding company for DNB First, National Association (the Bank). The Company operates through the Community Banking segment. The Bank is a commercial bank providing a range of services to individuals and small to medium sized businesses in the southeastern Pennsylvania market area, including accepting time, demand and savings deposits, and making secured and unsecured commercial, real estate and consumer loans. In addition, the Bank has over 10 branches and a wealth management group, DNB First Wealth Management. Its loan and lease portfolio consists primarily of commercial and residential real estate loans, commercial loans and lines of credit (including commercial construction), commercial leases and consumer loans. Its investment portfolio includes the United States agency securities, bank stocks, and other bonds and notes. Its primary source of funds is derived from customer deposits, which are typically generated by its branch offices.

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