Financial Analysis: Bankwell Financial Group (NASDAQ:BWFG) versus Pathward Financial (NASDAQ:CASH)

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

Valuation and Earnings

This table compares Bankwell Financial Group and Pathward Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bankwell Financial Group	$99.16 million	3.47	$9.77 million	$3.61	12.12
Pathward Financial	$673.63 million	2.32	$185.87 million	$7.90	8.69

Pathward Financial has higher revenue and earnings than Bankwell Financial Group. Pathward Financial 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.

Insider and Institutional Ownership

35.8% of Bankwell Financial Group shares are owned by institutional investors. Comparatively, 92.7% of Pathward Financial shares are owned by institutional investors. 19.5% of Bankwell Financial Group shares are owned by insiders. Comparatively, 1.2% of Pathward Financial shares are owned by 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.

Analyst Recommendations

This is a summary of current recommendations for Bankwell Financial Group and Pathward Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bankwell Financial Group	0	2	2	0	2.50
Pathward Financial	0	1	2	0	2.67

Bankwell Financial Group presently has a consensus target price of $47.50, suggesting a potential upside of 8.55%. Pathward Financial has a consensus target price of $91.00, suggesting a potential upside of 32.50%. Given Pathward Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Pathward Financial is more favorable than Bankwell Financial Group.

Dividends

Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Bankwell Financial Group pays out 22.2% of its earnings in the form of a dividend. Pathward Financial pays out 2.5% 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.

Risk & Volatility

Bankwell Financial Group has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500. Comparatively, Pathward Financial has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bankwell Financial Group	14.10%	10.18%	0.88%
Pathward Financial	22.45%	22.97%	2.57%

Summary

Pathward Financial beats Bankwell Financial Group on 11 of the 15 factors compared between the two stocks.

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.

About Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.