Critical Survey: ConnectOne Bancorp (NASDAQ:CNOB) versus Unity Bancorp (NASDAQ:UNTY)

Unity Bancorp (NASDAQ:UNTY) and ConnectOne Bancorp (NASDAQ:CNOB) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Unity Bancorp	29.85%	15.94%	1.76%
ConnectOne Bancorp	6.85%	7.12%	0.79%

Dividends

Unity Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. ConnectOne Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 3.0%. Unity Bancorp pays out 11.4% of its earnings in the form of a dividend. ConnectOne Bancorp pays out 82.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Unity Bancorp has increased its dividend for 12 consecutive years and ConnectOne Bancorp has increased its dividend for 4 consecutive years.

Volatility and Risk

Unity Bancorp has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, ConnectOne Bancorp has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Unity Bancorp and ConnectOne Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unity Bancorp	0	0	3	0	3.00
ConnectOne Bancorp	0	1	2	0	2.67

Unity Bancorp currently has a consensus price target of $62.00, suggesting a potential upside of 25.71%. ConnectOne Bancorp has a consensus price target of $30.25, suggesting a potential upside of 24.69%. Given Unity Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Unity Bancorp is more favorable than ConnectOne Bancorp.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unity Bancorp	$164.21 million	3.01	$41.45 million	$5.28	9.34
ConnectOne Bancorp	$534.62 million	2.28	$73.79 million	$0.87	27.89

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

Insider and Institutional Ownership

42.3% of Unity Bancorp shares are owned by institutional investors. Comparatively, 67.7% of ConnectOne Bancorp shares are owned by institutional investors. 29.7% of Unity Bancorp shares are owned by company insiders. Comparatively, 6.4% of ConnectOne Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Unity Bancorp beats ConnectOne Bancorp on 11 of the 17 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 ConnectOne Bancorp

ConnectOne Bancorp, Inc. operates as the bank holding company for ConnectOne Bank that provides commercial banking products and services for small and mid-sized businesses, local professionals, and individuals in the New York Metropolitan area and South Florida market. The company offers personal and business checking, money market, and time and savings accounts; credit cards, wire transfers, safe deposit boxes, automated teller services and telephone, and internet and mobile banking. It provides retirement accounts, consumers and cash management services for business clients, including treasury direct, automated clearing house, remote deposit capture, and digital invoicing. In addition, the company offers consumer and commercial business loans, including lines of credit, commercial and residential mortgages, home equity and bridge loans, and other personal loans; commercial loans secured by collateral, such as business assets comprising accounts receivable, inventory and equipment, and mortgages filed on commercial and residential real estate, as well as cash balances and marketable securities. Further, it provides real estate loans, which includes loans secured by first liens on completed commercial properties, including multi-family properties, to purchase or refinance properties; residential mortgages, such as loans secured by first liens on 1-4 family and condominium; and cooperative residential real estate loans. The company was formerly known as Center Bancorp, Inc. and changed its name to ConnectOne Bancorp, Inc. in July 2014. ConnectOne Bancorp, Inc. was incorporated in 1982 and is headquartered in Englewood Cliffs, New Jersey.