Head to Head Review: First United (NASDAQ:FUNC) vs. SmartFinancial (NASDAQ:SMBK)

First United (NASDAQ:FUNC) and SmartFinancial (NASDAQ:SMBK) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Dividends

First United pays an annual dividend of $1.04 per share and has a dividend yield of 2.4%. SmartFinancial pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. First United pays out 26.9% of its earnings in the form of a dividend. SmartFinancial pays out 10.6% 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. First United has raised its dividend for 6 consecutive years and SmartFinancial has raised its dividend for 3 consecutive years. First United is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for First United and SmartFinancial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First United	0	0	3	0	3.00
SmartFinancial	0	4	2	1	2.57

First United currently has a consensus price target of $49.50, suggesting a potential upside of 15.75%. SmartFinancial has a consensus price target of $50.42, suggesting a potential downside of 2.62%. Given First United’s stronger consensus rating and higher possible upside, equities analysts clearly believe First United is more favorable than SmartFinancial.

Profitability

This table compares First United and SmartFinancial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First United	20.05%	13.69%	1.36%
SmartFinancial	12.67%	7.33%	0.71%

Insider & Institutional Ownership

33.3% of First United shares are owned by institutional investors. Comparatively, 58.8% of SmartFinancial shares are owned by institutional investors. 8.1% of First United shares are owned by insiders. Comparatively, 6.9% of SmartFinancial shares are owned by 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.

Valuation & Earnings

This table compares First United and SmartFinancial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First United	$121.42 million	2.27	$24.51 million	$3.86	11.08
SmartFinancial	$210.19 million	4.21	$36.14 million	$3.39	15.27

SmartFinancial has higher revenue and earnings than First United. First United is trading at a lower price-to-earnings ratio than SmartFinancial, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

First United has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500. Comparatively, SmartFinancial has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Summary

First United beats SmartFinancial on 10 of the 18 factors compared between the two stocks.

About First United

First United Corporation operates as the bank holding company for First United Bank & Trust that provides various retail and commercial banking services to businesses and individuals. It offers various deposit products, which includes checking, savings, money market deposit, and regular and individual retirement accounts (IRAs), as well as certificates of deposit. The company loan portfolio includes commercial loans secured by real estate, commercial equipment, vehicles, or other assets of the borrower; commercial real estate loans for residential and commercial development, agricultural purpose properties, and service industry buildings, such as restaurants and motels, retail buildings, and general purpose business space; residential mortgage loans; home equity lines of credit; residential real estate construction loans; and indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. It also offers access to multi-million-dollar certificates of deposit and the Intrafi cash service, including multi-million-dollar savings and demand deposits to municipalities, businesses, and consumers; and treasury management, cash sweep, and various checking services. In addition, the company provides trust services, which includes personal trust, investment agency accounts, charitable trusts, retirement accounts, including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration, and estate planning; and insurance products, brokerage services, and safe deposit and night depository facilities. First United Corporation was founded in 1900 and is headquartered in Oakland, Maryland.

About SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, and Florida. It operates through Commercial Real Estate, Consumer Real Estate, Construction and Land Development, Commercial and Industrial, Leases, and Consumer and Other segments. The company offers noninterest-bearing and interest-bearing checking, interest-bearing demand, savings, money market, time deposit, individual retirement accounts, as well as certificates of deposit. It also provides commercial and residential real estate, consumer real estate, and construction and land development loans; commercial and financial loans and leases; commercial business and mortgage loans; and direct consumer installment, educational, agriculture, and other revolving credit loans; equipment financing, heavy equipment, semis, and trailers loans and leases to small and mid-size companies; letters of credit; and overdraft facilities. In addition, the company offers wealth management, insurance, mortgage origination, and internet and mobile banking services. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.