Webster Financial (NYSE:WBS) versus Community Heritage Financial (OTCMKTS:CMHF) Critical Analysis

Webster Financial (NYSE:WBS) and Community Heritage Financial (OTCMKTS:CMHF) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Insider & Institutional Ownership

85.6% of Webster Financial shares are owned by institutional investors. Comparatively, 12.2% of Community Heritage Financial shares are owned by institutional investors. 0.5% of Webster Financial shares are owned by company 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.

Profitability

This table compares Webster Financial and Community Heritage Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Webster Financial	22.95%	11.31%	1.24%
Community Heritage Financial	N/A	N/A	N/A

Analyst Recommendations

This is a summary of recent ratings and price targets for Webster Financial and Community Heritage Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Webster Financial	1	11	4	0	2.19
Community Heritage Financial	0	0	0	0	0.00

Webster Financial currently has a consensus price target of $73.96, indicating a potential upside of 1.63%. Given Webster Financial’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Webster Financial is more favorable than Community Heritage Financial.

Dividends

Webster Financial pays an annual dividend of $1.60 per share and has a dividend yield of 2.2%. Community Heritage Financial pays an annual dividend of $0.32 per share and has a dividend yield of 0.9%. Webster Financial pays out 26.2% of its earnings in the form of a dividend. Community Heritage Financial pays out 9.8% 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.

Volatility and Risk

Webster Financial has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Community Heritage Financial has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500.

Valuation & Earnings

This table compares Webster Financial and Community Heritage Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Webster Financial	$2.92 billion	4.04	$1.00 billion	$6.11	11.91
Community Heritage Financial	$60.49 million	1.68	$9.65 million	$3.27	10.55

Webster Financial has higher revenue and earnings than Community Heritage Financial. Community Heritage Financial is trading at a lower price-to-earnings ratio than Webster Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Webster Financial beats Community Heritage Financial on 15 of the 16 factors compared between the two stocks.

About Webster Financial

Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of financial products and services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Consumer Banking. The Commercial Banking segment offers commercial real estate and equipment financing, business banking, asset-based lending, and commercial services; public sector finance; mortgage warehouse financing; sponsor and specialty financing services; credit, deposit, and cash flow management services; and wealth management solutions to business owners and operators, including trust, asset management, financial planning, insurance, retirement, and investment products, as well as treasury management services comprising derivative, treasury, accounts payable, accounts receivable, and trade products and services. This segment also provides commercial services, such as accounts receivable factoring and trade financing, payroll funding, and business process outsourcing. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter benefit services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. The Consumer Banking segment provides consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers; and small business banking products, such as credit, deposit, and cash flow management products to businesses and professional service firms. The company offers online and mobile banking services. Webster Financial Corporation was founded in 1935 and is headquartered in Stamford, Connecticut.

About Community Heritage Financial

Community Heritage Financial, Inc. operates as the bank holding company for Middletown Valley Bank that provides retail and commercial banking services to individuals and businesses in Frederick and Washington counties in Maryland and Franklin County, Pennsylvania. Its primary deposit products include demand, savings, and time deposits, as well as lending products comprise real estate mortgages, commercial business loans, and instalment loans. The company also offers mortgage financing, new home purchases, refinancing, and construction lending in Middletown, Crofton, and Oakland, Maryland. The company was founded in 1908 and is based in Middletown, Maryland.