Analyzing Isabella Bank (OTCMKTS:ISBA) and Penns Woods Bancorp (NASDAQ:PWOD)

Isabella Bank (OTCMKTS:ISBA) and Penns Woods Bancorp (NASDAQ:PWOD) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, earnings, dividends, valuation and profitability.

Analyst Recommendations

This is a breakdown of current ratings for Isabella Bank and Penns Woods Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Isabella Bank	0	1	0	0	2.00
Penns Woods Bancorp	0	0	0	0	0.00

Isabella Bank presently has a consensus target price of $28.00, suggesting a potential downside of 12.06%. Given Isabella Bank’s stronger consensus rating and higher probable upside, analysts clearly believe Isabella Bank is more favorable than Penns Woods Bancorp.

Profitability

This table compares Isabella Bank and Penns Woods Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Isabella Bank	13.28%	7.34%	0.73%
Penns Woods Bancorp	14.87%	9.26%	0.82%

Institutional and Insider Ownership

27.9% of Penns Woods Bancorp shares are owned by institutional investors. 9.7% of Isabella Bank shares are owned by insiders. Comparatively, 3.8% of Penns Woods Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.5%. Penns Woods Bancorp pays an annual dividend of $1.28 per share and has a dividend yield of 4.3%. Isabella Bank pays out 56.9% of its earnings in the form of a dividend. Penns Woods Bancorp pays out 45.7% 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. Penns Woods Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Isabella Bank and Penns Woods Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Isabella Bank	$68.90 million	3.41	$13.89 million	$1.97	16.16
Penns Woods Bancorp	$71.00 million	3.19	$17.74 million	$2.80	10.63

Penns Woods Bancorp has higher revenue and earnings than Isabella Bank. Penns Woods Bancorp is trading at a lower price-to-earnings ratio than Isabella Bank, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Isabella Bank has a beta of 0.07, suggesting that its stock price is 93% less volatile than the S&P 500. Comparatively, Penns Woods Bancorp has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Summary

Penns Woods Bancorp beats Isabella Bank on 10 of the 15 factors compared between the two stocks.

About Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.

About Penns Woods Bancorp

Penns Woods Bancorp, Inc. operates as the bank holding company for Jersey Shore State Bank, which provides commercial and retail banking services to individuals, partnerships, non-profit organizations, and corporations. It accepts time, demand, and savings deposits, including super NOW accounts, statement savings accounts, money market accounts, and certificates of deposit, as well as checking and individual retirement account (IRAs) accounts. The company also offers loan products comprising residential, commercial, and construction real estate loans; agricultural loans for the purchase or improvement of real estate; commercial loans for the acquisition and improvement of real estate, purchase of equipment, and working capital purposes; letters of credit; consumer loans, such as construction and residential mortgages, home equity loans and lines, automobile financing, personal loans and lines of credit, and overdraft and check lines; and revolving credit loans with overdraft protection. In addition, it provides securities brokerage and financial planning services, which include the sale of life insurance products, annuities, and estate planning services; property and casualty, and auto insurance products; safe deposit services; ATM services; and Internet and telephone banking services. Further, the company engages in real estate transactions and investment activities. It operates through a network of offices located in Clinton, Lycoming, Centre, Montour, Union, Blair, and Luzerne Counties, Pennsylvania. Penns Woods Bancorp, Inc. was founded in 1934 and is headquartered in Williamsport, Pennsylvania.