Critical Review: Western New England Bancorp (NASDAQ:WNEB) and First Busey (NASDAQ:BUSE)

First Busey (NASDAQ:BUSE) and Western New England Bancorp (NASDAQ:WNEB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.

Insider and Institutional Ownership

56.5% of First Busey shares are owned by institutional investors. Comparatively, 67.9% of Western New England Bancorp shares are owned by institutional investors. 3.8% of First Busey shares are owned by company insiders. Comparatively, 6.6% of Western New England Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

First Busey has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Western New England Bancorp has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Earnings and Valuation

This table compares First Busey and Western New England Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Busey	$1.04 billion	2.43	$135.26 million	$2.42	12.67
Western New England Bancorp	$131.13 million	2.12	$15.27 million	$0.84	16.54

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

Analyst Recommendations

This is a summary of recent ratings for First Busey and Western New England Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Busey	0	3	4	0	2.57
Western New England Bancorp	0	3	1	0	2.25

First Busey currently has a consensus target price of $32.00, indicating a potential upside of 4.37%. Western New England Bancorp has a consensus target price of $15.50, indicating a potential upside of 11.59%. Given Western New England Bancorp’s higher possible upside, analysts clearly believe Western New England Bancorp is more favorable than First Busey.

Profitability

This table compares First Busey and Western New England Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Busey	21.00%	10.48%	1.40%
Western New England Bancorp	12.43%	6.78%	0.61%

Dividends

First Busey pays an annual dividend of $1.04 per share and has a dividend yield of 3.4%. Western New England Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 2.0%. First Busey pays out 43.0% of its earnings in the form of a dividend. Western New England Bancorp pays out 33.3% 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 Busey has increased its dividend for 10 consecutive years. First Busey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

First Busey beats Western New England Bancorp on 11 of the 17 factors compared between the two stocks.

About First Busey

First Busey Corporation operates as the bank holding company for Busey Bank that engages in the provision of retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. It operates through three segments: Banking, Wealth Management, and FirsTech. The Banking segment provides banking services to individual customers, such as demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as loan products, including residential real estate, home equity lines of credit, and consumer loans. This segment also offers banking services to corporate customers, including commercial, commercial real estate, real estate construction, and agricultural loans, as well as cash management services. The Wealth Management segment offers a range of investment and asset management, investment, brokerage, investment strategy consulting, fiduciary, philanthropic advisory, tax preparation, business succession planning, and employee retirement plan services to individuals, businesses, and foundations; and professional farm management services to the agricultural industry. The FirsTech segment provides payment technology solutions comprising online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments, as well as tools to help clients with billing, reconciliation, bill reminders, and treasury services. The company was founded in 1868 and is headquartered in Champaign, Illinois.

About Western New England Bancorp

Western New England Bancorp, Inc. operates as the holding company for Westfield Bank that provides a range of commercial and retail banking products and services to individuals and businesses. The company accepts various deposit accounts, including interest-bearing and noninterest-bearing checking, commercial checking, business, nonprofit and municipal checking, savings, money market and sweep, individual retirement, and other savings accounts; time deposits; certificates of deposit; and interest on lawyer's trust accounts. It also offers residential real estate loans, including first mortgages, home equity loans, and home equity lines, and secured by one-to-four family residential properties; commercial and industrial loans, such as letters of credit, revolving lines of credit, working capital, equipment financing, and term loans; commercial mortgage loans; construction and land development loans; home equity loans comprising home equity revolving loans and lines of credit; and consumer loans, including automobile, spa and pool, collateral, and personal lines of credit. In addition, the company provides automated teller machine (ATM), telephone and online banking, remote deposit capture, cash management, overdraft and safe deposit facility, and night deposit services. The company was formerly known as Westfield Financial, Inc. and changed its name to Western New England Bancorp, Inc. in October 2016. The company was founded in 1853 and is headquartered in Westfield, Massachusetts.