TowneBank (TOWN) and WesBanco (WSBC) Critical Analysis

TowneBank (NASDAQ: TOWN) and WesBanco (NASDAQ:WSBC) are both small-cap banks – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Dividends

TowneBank pays an annual dividend of $0.56 per share and has a dividend yield of 1.8%. WesBanco pays an annual dividend of $1.04 per share and has a dividend yield of 2.5%. TowneBank pays out 39.7% of its earnings in the form of a dividend. WesBanco pays out 48.6% 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.

Profitability

This table compares TowneBank and WesBanco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TowneBank 17.77% 8.73% 1.17%
WesBanco 22.43% 7.83% 1.09%

Valuation and Earnings

This table compares TowneBank and WesBanco’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TowneBank $493.23 million 3.96 $67.25 million $1.41 22.13
WesBanco $421.26 million 4.33 $86.63 million $2.14 19.36

WesBanco has lower revenue, but higher earnings than TowneBank. WesBanco is trading at a lower price-to-earnings ratio than TowneBank, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

TowneBank has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, WesBanco has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for TowneBank and WesBanco, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TowneBank 0 3 0 0 2.00
WesBanco 0 5 2 0 2.29

TowneBank currently has a consensus target price of $35.00, indicating a potential upside of 12.18%. WesBanco has a consensus target price of $42.25, indicating a potential upside of 1.95%. Given TowneBank’s higher probable upside, research analysts plainly believe TowneBank is more favorable than WesBanco.

Insider and Institutional Ownership

44.3% of TowneBank shares are held by institutional investors. Comparatively, 59.1% of WesBanco shares are held by institutional investors. 4.1% of WesBanco shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

WesBanco beats TowneBank on 10 of the 16 factors compared between the two stocks.

TowneBank Company Profile

TowneBank is a community bank. The Bank offers personal banking services and business banking services. The Bank operates through three segments: Banking, Realty and Insurance. The Banking segment provides loan and deposit services to retail and commercial customers. The Realty segment provides residential real estate services, originations of a range of mortgage loans, resort property management, and residential and commercial title insurance. The Insurance segment provides property and casualty insurance, as well as employee and group benefits. The Bank provides checking accounts, cards, savings, money markets and certificate of deposits (CDs), mobile banking, financial management software, private banking and switch kit. The Bank also offers auto loans, home equity loans, construction loans, lot loans, recreational vehicles, mortgage loans, land acquisition loans, construction loans, development Loans, and personal loans and lines of credit.

WesBanco Company Profile

WesBanco, Inc. (WesBanco) is a bank holding company. The Company offers a range of financial services, including retail banking, corporate banking, personal and corporate trust services, brokerage services, mortgage banking and insurance. WesBanco offers its services through two segments: community banking, which offers services, such as commercial demand, individual demand and time deposit accounts, as well as commercial, mortgage and individual installment loans, and trust and investment services, which offers trust services, as well as various alternative investment products, including mutual funds. The Community Banking segment also offers insurance and securities brokerage services, among others. As of December 31, 2016, WesBanco operated one commercial bank, WesBanco Bank, Inc. through 174 branches and 163 automated teller machines (ATMs) located in West Virginia, Ohio, western Pennsylvania, Kentucky and southern Indiana.

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