Contrasting Franklin Financial Services (NASDAQ:FRAF) and Mid Penn Bancorp (NASDAQ:MPB)

Franklin Financial Services (NASDAQ:FRAF) and Mid Penn Bancorp (NASDAQ:MPB) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, valuation, earnings, analyst recommendations, institutional ownership and profitability.

Valuation & Earnings

This table compares Franklin Financial Services and Mid Penn Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Financial Services	$115.13 million	1.49	$11.10 million	$2.60	14.77
Mid Penn Bancorp	$309.08 million	1.80	$49.44 million	$2.88	9.95

Mid Penn Bancorp has higher revenue and earnings than Franklin Financial Services. Mid Penn Bancorp is trading at a lower price-to-earnings ratio than Franklin Financial Services, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

24.8% of Franklin Financial Services shares are held by institutional investors. Comparatively, 43.1% of Mid Penn Bancorp shares are held by institutional investors. 7.4% of Franklin Financial Services shares are held by company insiders. Comparatively, 8.1% of Mid Penn Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Franklin Financial Services pays an annual dividend of $1.32 per share and has a dividend yield of 3.4%. Mid Penn Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.8%. Franklin Financial Services pays out 50.8% of its earnings in the form of a dividend. Mid Penn Bancorp pays out 27.8% 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. Franklin Financial Services has increased its dividend for 1 consecutive years. Franklin Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Franklin Financial Services and Mid Penn Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Financial Services	0	0	0	0	0.00
Mid Penn Bancorp	0	0	2	0	3.00

Mid Penn Bancorp has a consensus target price of $36.00, indicating a potential upside of 25.57%. Given Mid Penn Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Mid Penn Bancorp is more favorable than Franklin Financial Services.

Volatility and Risk

Franklin Financial Services has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500. Comparatively, Mid Penn Bancorp has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500.

Profitability

This table compares Franklin Financial Services and Mid Penn Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Financial Services	9.82%	8.00%	0.54%
Mid Penn Bancorp	16.36%	8.23%	0.92%

Summary

Mid Penn Bancorp beats Franklin Financial Services on 14 of the 17 factors compared between the two stocks.

About Franklin Financial Services

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.

About Mid Penn Bancorp

Mid Penn Bancorp, Inc. operates as the bank holding company for Mid Penn Bank that provides commercial banking services to individuals, partnerships, non-profit organizations, and corporations. The company offers various time and demand deposit products, including checking accounts, savings accounts, clubs, money market deposit accounts, certificates of deposit, and individual retirement accounts. It also provides a range of loan products comprising mortgage and home equity loans, secured and unsecured commercial and consumer loans, lines of credit, construction financing, farm loans, community development loans, loans to non-profit entities, and local government loans. In addition, the company offers trust, retail investment, wealth management, and insurance services; and provides online banking, telephone banking, cash management, and automated teller services, as well as safe deposit boxes. The company was founded in 1868 and is headquartered in Harrisburg, Pennsylvania.