Norwood Financial (NASDAQ:NWFL) and Ottawa Bancorp (OTCMKTS:OTTW) Head to Head Review

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

Volatility & Risk

Ottawa Bancorp has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, Norwood Financial has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Ottawa Bancorp and Norwood Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ottawa Bancorp	0	0	0	0	0.00
Norwood Financial	0	3	1	1	2.60

Norwood Financial has a consensus target price of $28.50, indicating a potential downside of 0.07%. Given Norwood Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Norwood Financial is more favorable than Ottawa Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ottawa Bancorp	9.05%	4.04%	0.46%
Norwood Financial	6.82%	10.86%	1.01%

Dividends

Ottawa Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 3.0%. Norwood Financial pays an annual dividend of $1.24 per share and has a dividend yield of 4.3%. Ottawa Bancorp pays out 55.7% of its earnings in the form of a dividend. Norwood Financial pays out 190.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Norwood Financial has raised its dividend for 7 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Ottawa Bancorp and Norwood Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ottawa Bancorp	$17.43 million	1.95	$780,000.00	$0.79	18.75
Norwood Financial	$63.45 million	4.16	-$160,000.00	$0.65	43.88

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

Insider & Institutional Ownership

28.1% of Norwood Financial shares are held by institutional investors. 7.8% of Ottawa Bancorp shares are held by company insiders. Comparatively, 9.1% of Norwood Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Norwood Financial beats Ottawa Bancorp on 14 of the 18 factors compared between the two stocks.

About Ottawa Bancorp

Ottawa Bancorp, Inc. operates as the bank holding company for OSB Community Bank, a savings bank that provides various financial services to individual and corporate customers in Illinois. The company's deposit products include saving, checking, money market, and interest-bearing accounts, as well as certificate of deposit. Its loan portfolio comprises commercial, non-residential real estate, one-to-four family residential, multi-family residential, consumer direct, and purchased auto loans; business and construction loans; motor vehicle, home improvement, share, and personal unsecured loans, as well as home equity and small personal credit lines; mortgage loans; and student loans. The company also provides cash management solutions, such as remote deposit capture, automated clearing house/payroll direct deposit, and merchant services, as well as commercial leasing services. In addition, it offers notary, lamination, night depository, document faxing, money gift envelopes, safe deposit boxes, and coin counting, as well as debit and credit cards, and digital banking services. The company was formerly known as Ottawa Savings Bancorp, Inc. and changed its name to Ottawa Bancorp, Inc. in October 2016. Ottawa Bancorp, Inc. was founded in 1871 and is based in Ottawa, Illinois.

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.