Critical Survey: Isabella Bank (OTCMKTS:ISBA) versus Penns Woods Bancorp (NASDAQ:PWOD)

Penns Woods Bancorp (NASDAQ:PWOD) and Isabella Bank (OTCMKTS:ISBA) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, profitability, risk, analyst recommendations, valuation and dividends.

Insider & Institutional Ownership

27.9% of Penns Woods Bancorp shares are owned by institutional investors. 3.8% of Penns Woods Bancorp shares are owned by company insiders. Comparatively, 9.7% of Isabella Bank shares are owned by company 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.

Risk and Volatility

Penns Woods Bancorp has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Isabella Bank has a beta of 0.07, suggesting that its stock price is 93% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Penns Woods Bancorp and Isabella Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Penns Woods Bancorp	0	0	0	0	0.00
Isabella Bank	0	1	0	0	2.00

Isabella Bank has a consensus price target of $28.00, indicating a potential downside of 12.06%. Given Isabella Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Isabella Bank is more favorable than Penns Woods Bancorp.

Dividends

Penns Woods Bancorp pays an annual dividend of $1.28 per share and has a dividend yield of 4.3%. Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.5%. Penns Woods Bancorp pays out 45.7% of its earnings in the form of a dividend. Isabella Bank pays out 56.9% 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. Penns Woods Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Penns Woods Bancorp and Isabella Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Penns Woods Bancorp	$71.00 million	3.19	$17.74 million	$2.80	10.63
Isabella Bank	$68.90 million	3.41	$13.89 million	$1.97	16.16

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

Profitability

This table compares Penns Woods Bancorp and Isabella Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Penns Woods Bancorp	14.87%	9.26%	0.82%
Isabella Bank	13.28%	7.34%	0.73%

Summary

Penns Woods Bancorp beats Isabella Bank on 10 of the 15 factors compared between the two stocks.

About Penns Woods Bancorp

Penns Woods Bancorp, Inc. operates as the bank holding company for Jersey Shore State Bank, which provides commercial and retail banking services to individuals, partnerships, non-profit organizations, and corporations. It accepts time, demand, and savings deposits, including super NOW accounts, statement savings accounts, money market accounts, and certificates of deposit, as well as checking and individual retirement account (IRAs) accounts. The company also offers loan products comprising residential, commercial, and construction real estate loans; agricultural loans for the purchase or improvement of real estate; commercial loans for the acquisition and improvement of real estate, purchase of equipment, and working capital purposes; letters of credit; consumer loans, such as construction and residential mortgages, home equity loans and lines, automobile financing, personal loans and lines of credit, and overdraft and check lines; and revolving credit loans with overdraft protection. In addition, it provides securities brokerage and financial planning services, which include the sale of life insurance products, annuities, and estate planning services; property and casualty, and auto insurance products; safe deposit services; ATM services; and Internet and telephone banking services. Further, the company engages in real estate transactions and investment activities. It operates through a network of offices located in Clinton, Lycoming, Centre, Montour, Union, Blair, and Luzerne Counties, Pennsylvania. Penns Woods Bancorp, Inc. was founded in 1934 and is headquartered in Williamsport, Pennsylvania.

About Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.