Lakeland Bancorp (NASDAQ: LBAI) and Washington Trust Bancorp (NASDAQ:WASH) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitabiliy.

Profitability

This table compares Lakeland Bancorp and Washington Trust Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lakeland Bancorp 23.44% 8.85% 0.93%
Washington Trust Bancorp 23.49% 12.02% 1.12%

Valuation & Earnings

This table compares Lakeland Bancorp and Washington Trust Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lakeland Bancorp $170.45 million 5.60 $47.82 million $1.01 19.95
Washington Trust Bancorp $170.29 million 5.21 $47.14 million $2.74 18.81

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

Institutional & Insider Ownership

53.9% of Lakeland Bancorp shares are held by institutional investors. Comparatively, 55.0% of Washington Trust Bancorp shares are held by institutional investors. 6.2% of Lakeland Bancorp shares are held by insiders. Comparatively, 2.6% of Washington Trust Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Lakeland Bancorp has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Washington Trust Bancorp has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Dividends

Lakeland Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Washington Trust Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.9%. Lakeland Bancorp pays out 39.6% of its earnings in the form of a dividend. Washington Trust Bancorp pays out 55.5% 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.

Analyst Ratings

This is a breakdown of recent recommendations for Lakeland Bancorp and Washington Trust Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lakeland Bancorp 0 3 0 0 2.00
Washington Trust Bancorp 0 1 1 0 2.50

Washington Trust Bancorp has a consensus target price of $50.50, indicating a potential downside of 2.04%. Given Washington Trust Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Washington Trust Bancorp is more favorable than Lakeland Bancorp.

Summary

Washington Trust Bancorp beats Lakeland Bancorp on 9 of the 16 factors compared between the two stocks.

Lakeland Bancorp Company Profile

Lakeland Bancorp, Inc. is the bank holding company for Lakeland Bank (Lakeland). Lakeland operates under a state bank charter and provides full banking services. Lakeland generates commercial, mortgage and consumer loans and receives deposits from customers located in Northern and Central New Jersey. Lakeland also provides non-deposit products, such as securities brokerage services, including mutual funds and variable annuities. Through Lakeland, the Company offers a range of lending, depository and related financial services to individuals and small to medium sized businesses located in northern and central New Jersey. Lakeland’s equipment financing division provides a solution to small and medium sized companies preferring to lease equipment over other financial alternatives. Lakeland’s asset based loan department provides commercial borrowers with another lending alternative. It also offers wire transfer, Internet banking, mobile banking and night depository services.

Washington Trust Bancorp Company Profile

Washington Trust Bancorp, Inc. is a bank holding company and financial holding company. The Company is a holding company of The Washington Trust Company, of Westerly (the Bank), a Rhode Island chartered commercial bank. The Company operates through two business segments: Commercial Banking and Wealth Management Services. The Company offers a range of product lines of banking and financial services to individuals and businesses, including commercial, residential and consumer lending, retail and commercial deposit products, and wealth management services through its offices in Rhode Island, eastern Massachusetts and Connecticut; its automated teller machines (ATMs); telephone banking; mobile banking and its Internet Website (www.washtrust.com). Its investment securities portfolio amounted to $755.5 million, as of December 31, 2016. The Company’s total loan portfolio amounted to $3.2 billion, as of December 31, 2016.

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