Critical Survey: Dime Community Bancshares (DCOM) & MidWestOne Financial Group (MOFG)

Dime Community Bancshares (NASDAQ: DCOM) and MidWestOne Financial Group (NASDAQ:MOFG) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Risk & Volatility

Dime Community Bancshares has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, MidWestOne Financial Group has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Dime Community Bancshares and MidWestOne Financial Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dime Community Bancshares 1 2 1 0 2.00
MidWestOne Financial Group 0 1 2 0 2.67

Dime Community Bancshares currently has a consensus target price of $22.25, suggesting a potential upside of 20.92%. MidWestOne Financial Group has a consensus target price of $38.67, suggesting a potential upside of 24.45%. Given MidWestOne Financial Group’s stronger consensus rating and higher probable upside, analysts clearly believe MidWestOne Financial Group is more favorable than Dime Community Bancshares.

Insider & Institutional Ownership

70.3% of Dime Community Bancshares shares are held by institutional investors. Comparatively, 43.2% of MidWestOne Financial Group shares are held by institutional investors. 7.3% of Dime Community Bancshares shares are held by company insiders. Comparatively, 25.3% of MidWestOne Financial Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Dime Community Bancshares and MidWestOne Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dime Community Bancshares 22.21% 8.30% 0.77%
MidWestOne Financial Group 17.35% 7.38% 0.79%

Valuation and Earnings

This table compares Dime Community Bancshares and MidWestOne Financial Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dime Community Bancshares $233.61 million 2.95 $51.88 million $1.39 13.24
MidWestOne Financial Group $135.76 million 2.80 $20.39 million $2.03 15.31

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

Dividends

Dime Community Bancshares pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. MidWestOne Financial Group pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. Dime Community Bancshares pays out 40.3% of its earnings in the form of a dividend. MidWestOne Financial Group pays out 33.5% 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.

Summary

MidWestOne Financial Group beats Dime Community Bancshares on 9 of the 16 factors compared between the two stocks.

Dime Community Bancshares Company Profile

Dime Community Bancshares, Inc. operates as a holding company for Dime Community Bank (the Bank), a chartered savings bank. The Company is a unitary savings and loan holding company. The Company operates through Community Banking segment. The Bank’s principal business is gathering retail deposits, and lending them primarily in multifamily residential, commercial real estate and mixed use loans, as well as investing in mortgage-backed securities (MBS), obligations of the United States Government and Government Sponsored Entities (GSEs), and corporate debt and equity securities. The Bank’s primary sources of funds are, in general, deposits; loan amortization, prepayments and maturities; MBS amortization, prepayments and maturities; investment securities maturities and sales, and advances from the Federal Home Loan Bank of New York (FHLBNY).

MidWestOne Financial Group Company Profile

MidWestOne Financial Group, Inc. is a bank holding and financial holding company. The Company operates through its bank subsidiaries, MidWestOne Bank, Central Bank and MidWestOne Insurance Services, Inc. that operates through three agencies located in central and east-central Iowa. As of December 31, 2016, the Bank operated a total of 43 banking offices in Iowa, Minnesota, Wisconsin, and Florida. It provides full service retail banking in the communities in which its branch offices are located and also offers trust and investment management services. The Bank offers deposit products, including checking and other demand deposit accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts and other time deposits. The Bank offers commercial and industrial, agricultural, real estate mortgage and consumer loans.

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