Head to Head Contrast: Norwood Financial (NASDAQ:NWFL) vs. Northern Trust (NASDAQ:NTRS)

Norwood Financial (NASDAQ:NWFL) and Northern Trust (NASDAQ:NTRS) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Insider & Institutional Ownership

28.1% of Norwood Financial shares are held by institutional investors. Comparatively, 83.2% of Northern Trust shares are held by institutional investors. 9.3% of Norwood Financial shares are held by company insiders. Comparatively, 0.6% of Northern Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Norwood Financial and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norwood Financial	16.17%	9.64%	0.78%
Northern Trust	9.14%	12.44%	0.89%

Dividends

Norwood Financial pays an annual dividend of $1.20 per share and has a dividend yield of 5.1%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 3.8%. Norwood Financial pays out 58.0% of its earnings in the form of a dividend. Northern Trust pays out 59.1% 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. Norwood Financial has increased its dividend for 6 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Norwood Financial and Northern Trust’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norwood Financial	$103.66 million	1.84	$16.76 million	$2.07	11.38
Northern Trust	$12.12 billion	1.34	$1.11 billion	$5.08	15.66

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

Volatility and Risk

Norwood Financial has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Norwood Financial and Northern Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norwood Financial	0	0	0	0	N/A
Northern Trust	2	6	3	0	2.09

Northern Trust has a consensus price target of $83.09, indicating a potential upside of 4.44%. Given Northern Trust’s higher possible upside, analysts clearly believe Northern Trust is more favorable than Norwood Financial.

Summary

Northern Trust beats Norwood Financial on 10 of the 16 factors compared between the two stocks.

About Norwood Financial

Norwood Financial Corp. operates as the bank holding company for Wayne Bank that provides various banking products and services. The company accepts a range of deposit products, including interest-bearing and non-interest-bearing transaction accounts, and statement savings and money market accounts, as well as certificate of deposits. It also provides commercial loans comprising lines of credit, revolving credit, term loans, mortgages, secured lending products, and letter of credit facilities; municipal finance lending; construction loans for commercial construction projects and single-family residences; land loans; construction financing; consumer loans; mortgage lending to finance principal residences and second home dwellings; and indirect dealer financing of new and used automobiles, boats, and recreational vehicles. In addition, the company offers investment securities services; personal and business credit services; trust and investment products; and cash management, direct deposit, remote deposit capture, mobile deposit capture, automated clearing house activity, real estate settlement, and Internet and mobile banking services. Further, it engages in the annuity and mutual fund sale, and discount brokerage activities, as well as insurance agency business. The company serves consumers, businesses, nonprofit organizations, and municipalities. It operates branches in Northeastern Pennsylvania; and in Delaware, Sullivan, Ontario, Otsego, and Yates Counties, New York, as well as automated teller machines. Norwood Financial Corp. was founded in 1870 and is headquartered in Honesdale, Pennsylvania.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.