Bankwell Financial Group (NASDAQ:BWFG) and Unity Bancorp (NASDAQ:UNTY) Financial Analysis

Unity Bancorp (NASDAQ:UNTY) and Bankwell Financial Group (NASDAQ:BWFG) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Institutional & Insider Ownership

42.3% of Unity Bancorp shares are owned by institutional investors. Comparatively, 35.8% of Bankwell Financial Group shares are owned by institutional investors. 29.7% of Unity Bancorp shares are owned by company insiders. Comparatively, 19.2% of Bankwell Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Unity Bancorp	25.24%	15.08%	1.59%
Bankwell Financial Group	4.76%	3.48%	0.30%

Dividends

Unity Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.4%. Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 2.9%. Unity Bancorp pays out 13.8% of its earnings in the form of a dividend. Bankwell Financial Group pays out 67.8% 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. Unity Bancorp has increased its dividend for 12 consecutive years.

Valuation & Earnings

This table compares Unity Bancorp and Bankwell Financial Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unity Bancorp	$105.94 million	3.68	$41.45 million	$4.06	9.54
Bankwell Financial Group	$87.00 million	2.54	$9.31 million	$1.18	23.72

Unity Bancorp has higher revenue and earnings than Bankwell Financial Group. Unity Bancorp 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.

Volatility & Risk

Unity Bancorp has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Bankwell Financial Group has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Unity Bancorp and Bankwell Financial Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unity Bancorp	0	0	2	0	3.00
Bankwell Financial Group	0	0	1	0	3.00

Unity Bancorp currently has a consensus price target of $54.50, suggesting a potential upside of 40.72%. Bankwell Financial Group has a consensus price target of $40.00, suggesting a potential upside of 42.91%. Given Bankwell Financial Group’s higher probable upside, analysts plainly believe Bankwell Financial Group is more favorable than Unity Bancorp.

Summary

Unity Bancorp beats Bankwell Financial Group on 13 of the 16 factors compared between the two stocks.

About Unity Bancorp

Unity Bancorp, Inc. operates as a bank holding company for Unity Bank that provides range of commercial and retail banking services to individuals, small and medium sized businesses, and professional communities. It offers personal and business checking accounts, time deposits, money market accounts, savings accounts, and retirement accounts, as well as noninterest and interest-bearing demand deposits. The company also provides small business administration loans; commercial loans; and residential mortgage and consumer loans, including residential real estate, home equity lines and loans, and residential construction lines, as well as personal loans. In addition, it offers credit and debit cards, wire transfer, safe deposit box, automated teller, and internet and mobile banking services; and automated clearing house origination and remote deposit capture services. Unity Bancorp, Inc. was incorporated in 1991 and is headquartered in Clinton, New Jersey.

About Bankwell Financial Group

Bankwell Financial Group, Inc. operates as the bank holding company for Bankwell Bank that provides various banking services for individual and commercial customers. It offers various traditional depository products, including checking, savings, money market, and certificates of deposit. The company also provides first mortgage loans secured by one-to-four family owner occupied residential properties for personal use; home equity loans and home equity lines of credit secured by owner occupied one-to-four family residential properties; loans secured by commercial real estate, multi-family dwellings, owner-occupied commercial real estate, and investor-owned one-to-four family dwellings; commercial construction loans for commercial development projects, including apartment buildings and condominiums, as well as office buildings, retail, and other income producing properties; land loans; commercial business loans secured by assignments of corporate assets and personal guarantees of the business owners; loans to finance insurance premiums; overdraft lines of credit; and unsecured personal loans. It operates branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut. 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.