Capstar Financial (NASDAQ: CSTR) and Western New England Bancorp (NASDAQ:WNEB) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Capstar Financial and Western New England Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capstar Financial 0 4 0 0 2.00
Western New England Bancorp 0 3 1 0 2.25

Capstar Financial currently has a consensus target price of $18.00, indicating a potential downside of 16.97%. Western New England Bancorp has a consensus target price of $11.50, indicating a potential upside of 5.02%. Given Western New England Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Western New England Bancorp is more favorable than Capstar Financial.

Risk & Volatility

Capstar Financial has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500. Comparatively, Western New England Bancorp has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Dividends

Western New England Bancorp pays an annual dividend of $0.12 per share and has a dividend yield of 1.1%. Capstar Financial does not pay a dividend. Western New England Bancorp pays out 24.5% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Capstar Financial 7.05% 9.27% 0.95%
Western New England Bancorp 18.20% 5.95% 0.71%

Institutional and Insider Ownership

35.6% of Capstar Financial shares are held by institutional investors. Comparatively, 56.7% of Western New England Bancorp shares are held by institutional investors. 19.3% of Capstar Financial shares are held by company insiders. Comparatively, 5.6% of Western New England Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Capstar Financial 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
Capstar Financial $56.48 million 4.36 $9.09 million $0.35 61.94
Western New England Bancorp $54.57 million 6.15 $4.83 million $0.49 22.35

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

Summary

Western New England Bancorp beats Capstar Financial on 9 of the 16 factors compared between the two stocks.

About Capstar Financial

CapStar Financial Holdings, Inc. is a bank holding company. The Company operates primarily through its subsidiary, CapStar Bank. CapStar Bank is a commercial bank. The Company’s lines of business include commercial and industrial, commercial real estate, healthcare, correspondent banking, personal and private banking and wealth management, and mortgage banking. Its products and services include commercial and industrial loans to small and medium sized businesses, with a particular focus on businesses operating in the healthcare industry; commercial real estate loans; private banking and wealth management services for the owners and operators of business clients and other high net worth individuals, and correspondent banking services. As of June 30, 2016, the Company had seven locations, five of which are retail bank branches and two of which are mortgage origination offices.

About Western New England Bancorp

Western New England Bancorp, Inc., formerly Westfield Financial, Inc., is a Massachusetts-chartered stock holding company. The Company serves as a holding company for Westfield Bank (the Bank). It is a provider of banking products and services to business organizations and individuals, including products such as residential and commercial loans, consumer loans and a variety of deposit products. It focuses on residential real estate lending, as well as servicing commercial customers, including commercial and industrial lending and commercial deposit relationships. In addition, it provides online banking services. It operates through over 21 banking offices located in Agawam, Chicopee, East Longmeadow, Feeding Hills, Holyoke, Ludlow, Southwick, Springfield, Ware, West Springfield and Westfield, Massachusetts, and Granby and Enfield, Connecticut. It also has over 10 automated teller machine (ATM) locations in Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts.

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