Financial Comparison: Bankwell Financial Group (BWFG) and Signature Bank (NASDAQ:SBNY)

Signature Bank (NASDAQ:SBNY) and Bankwell Financial Group (NASDAQ:BWFG) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitability, risk, analyst recommendations, institutional ownership, dividends and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Signature Bank and Bankwell Financial Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Signature Bank 0 4 9 1 2.79
Bankwell Financial Group 0 2 1 0 2.33

Signature Bank presently has a consensus target price of $141.89, indicating a potential upside of 11.79%. Bankwell Financial Group has a consensus target price of $35.50, indicating a potential upside of 21.74%. Given Bankwell Financial Group’s higher probable upside, analysts plainly believe Bankwell Financial Group is more favorable than Signature Bank.

Institutional & Insider Ownership

94.2% of Signature Bank shares are owned by institutional investors. Comparatively, 52.7% of Bankwell Financial Group shares are owned by institutional investors. 16.3% of Bankwell Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Signature Bank has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Bankwell Financial Group has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500.

Dividends

Signature Bank pays an annual dividend of $2.24 per share and has a dividend yield of 1.8%. Bankwell Financial Group pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Signature Bank pays out 19.9% of its earnings in the form of a dividend. Bankwell Financial Group pays out 21.8% 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. Bankwell Financial Group has increased its dividend for 3 consecutive years. Bankwell Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Signature Bank and Bankwell Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Signature Bank 34.17% 14.15% 1.31%
Bankwell Financial Group 20.64% 11.11% 1.03%

Valuation and Earnings

This table compares Signature Bank and Bankwell Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Signature Bank $1.73 billion 4.03 $505.34 million $11.28 11.25
Bankwell Financial Group $83.96 million 2.73 $17.43 million $2.39 12.20

Signature Bank has higher revenue and earnings than Bankwell Financial Group. Signature Bank is trading at a lower price-to-earnings ratio than Bankwell Financial Group, indicating that it is currently the more affordable of the two stocks.

Summary

Signature Bank beats Bankwell Financial Group on 13 of the 18 factors compared between the two stocks.

Signature Bank Company Profile

Signature Bank provides various business and personal banking products and services. It accepts various deposit products, including commercial checking accounts, money market accounts, escrow deposit accounts, cash concentration accounts, interest-bearing and non-interest-bearing checking accounts, certificates of deposit, time deposits, and other cash management products. The company also offers loan products comprising commercial and industrial loans; real estate loans, such as loans secured by commercial and residential properties, and construction and land loans; temporary financing for commercial and residential properties; letters of credit; and personal lines of credit and loans to acquire personal assets, as well as asset-based lending, mortgages, home equity loans, and credit card accounts. In addition, it provides investment, brokerage, and asset management products and services; retirement products, such as individual retirement accounts and administrative services for retirement vehicles, which include pension, profit sharing, and 401(k) plans to its clients, as well as business retirement accounts; and a range of financing and leasing products consisting of equipment, transportation, taxi medallion, commercial marine, and municipal and national franchise financing services. Further, the company offers wealth management services to its high net worth personal clients; and a range of individual and group insurance products that comprise health, life, disability, and long-term care insurance products as an agent. Additionally, it purchases, securitizes, and sells guaranteed portions of the U.S. small business administration loans. As of December 31, 2017, the company operated 30 private client offices located in the New York metropolitan area, which included Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island, and Connecticut. Signature Bank was incorporated in 2000 and is headquartered in New York, New York.

Bankwell Financial Group Company Profile

Bankwell Financial Group, Inc. operates as the bank holding company for Bankwell Bank that provides a range of banking services to commercial and consumer customers in Connecticut. It accepts checking, savings, and money market accounts; and time, demand, and NOW deposits, as well as certificates of deposit. The company also provides commercial lending products, including residential real estate loans, owner-occupied commercial real estate loans, commercial real estate investment loans, business term loans, equipment financing, and lines of credit to small and mid-sized businesses, as well as real estate construction and development loans; and consumer loans, such as loans secured by savings or certificate accounts, or automobiles, as well as unsecured personal loans and overdraft lines of credit. As of June 9, 2018, it operated through a network of 12 branches. The company was formerly known as BNC Financial Group, Inc. and changed its name to Bankwell Financial Group, Inc. in September 2013. Bankwell Financial Group, Inc. was founded in 2002 and is headquartered in New Canaan, Connecticut.

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