Finward Bancorp (NASDAQ:FNWD) and ChoiceOne Financial Services (NASDAQ:COFS) Critical Review

Finward Bancorp (NASDAQ:FNWD) and ChoiceOne Financial Services (NASDAQ:COFS) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.

Volatility & Risk

Finward Bancorp has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500. Comparatively, ChoiceOne Financial Services has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Insider & Institutional Ownership

26.6% of Finward Bancorp shares are held by institutional investors. Comparatively, 19.9% of ChoiceOne Financial Services shares are held by institutional investors. 13.1% of Finward Bancorp shares are held by insiders. Comparatively, 6.5% of ChoiceOne Financial Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Finward Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 1.4%. ChoiceOne Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 3.6%. Finward Bancorp pays out 21.0% of its earnings in the form of a dividend. ChoiceOne Financial Services pays out 31.4% 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. ChoiceOne Financial Services has increased its dividend for 13 consecutive years. ChoiceOne Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Finward Bancorp and ChoiceOne Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Finward Bancorp	$101.06 million	1.42	$8.09 million	$2.29	14.47
ChoiceOne Financial Services	$227.62 million	2.13	$28.18 million	$3.70	8.76

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

Analyst Ratings

This is a summary of recent ratings and target prices for Finward Bancorp and ChoiceOne Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Finward Bancorp	0	1	1	0	2.50
ChoiceOne Financial Services	0	2	2	0	2.50

Finward Bancorp presently has a consensus target price of $41.00, indicating a potential upside of 23.75%. ChoiceOne Financial Services has a consensus target price of $34.00, indicating a potential upside of 4.94%. Given Finward Bancorp’s higher possible upside, equities analysts plainly believe Finward Bancorp is more favorable than ChoiceOne Financial Services.

Profitability

This table compares Finward Bancorp and ChoiceOne Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Finward Bancorp	9.72%	5.92%	0.48%
ChoiceOne Financial Services	23.07%	12.31%	1.28%

Summary

ChoiceOne Financial Services beats Finward Bancorp on 11 of the 16 factors compared between the two stocks.

About Finward Bancorp

Finward Bancorp operates as the holding company for Peoples Bank that provides various banking products and services. The company’s deposit products include non-interest- and interest-bearing demand accounts, savings accounts, money market deposit accounts, certificate accounts, and retirement savings plans. Its loan products portfolio comprises residential mortgage loans that enable borrowers to purchase existing homes, refinance existing homes, or construct new homes; construction loans primarily to individuals and contractors; commercial real estate loans; consumer loans to individuals for personal, household, or family purposes; home equity line of credit; home improvement loans and equity loans; commercial business loans; government loans; and loans to municipalities. The company also offers estate and retirement planning, custodial services, guardianships, IRA accounts, and investment agency accounts, as well as serves as the personal representative of estates, and acts as trustee for revocable and irrevocable trusts. In addition, it provides insurance and annuity investments to wealth management customers; holds real estate properties; and operates as a real estate investment trust. The company was formerly known as NorthWest Indiana Bancorp and changed its name to Finward Bancorp in May 2021. Finward Bancorp was founded in 1916 and is headquartered in Munster, Indiana.

About ChoiceOne Financial Services

ChoiceOne Financial Services, Inc. operates as the bank holding company for ChoiceOne Bank that provides banking services to corporations, partnerships, and individuals in Michigan. The company offers various deposit products, including time, savings, and demand deposits, safe deposit, and automated transaction machine services. It also provides commercial lending products, such as business, industry, agricultural, construction, inventory, and real estate loans; and consumer loans comprising direct and indirect loans to consumers and purchasers of residential and real properties. In addition, the company offers alternative investment products, which include annuities and mutual funds; and sells insurance policies, such as life and health for commercial and consumer clients. Further, it provides trust and wealth management services. ChoiceOne Financial Services, Inc. was founded in 1898 and is headquartered in Sparta, Michigan.