Contrasting Northeast Bancorp (NASDAQ:NBN) and First National (NASDAQ:FXNC)

Northeast Bancorp (NASDAQ:NBN) and First National (NASDAQ:FXNC) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, dividends, institutional ownership, profitability and analyst recommendations.

Institutional and Insider Ownership

33.9% of First National shares are owned by institutional investors. 14.2% of Northeast Bancorp shares are owned by company insiders. Comparatively, 14.2% of First National shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Northeast Bancorp and First National, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Bancorp	0	1	2	0	2.67
First National	0	1	1	1	3.00

Northeast Bancorp presently has a consensus price target of $143.50, indicating a potential upside of 13.63%. Given Northeast Bancorp’s higher probable upside, equities analysts plainly believe Northeast Bancorp is more favorable than First National.

Earnings and Valuation

This table compares Northeast Bancorp and First National”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Bancorp	$385.07 million	2.69	$107.48 million	$13.47	9.38
First National	$93.26 million	2.95	$17.70 million	$2.54	11.98

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

Dividends

Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. First National pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. Northeast Bancorp pays out 0.3% of its earnings in the form of a dividend. First National pays out 26.8% 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. First National has increased its dividend for 10 consecutive years. First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Northeast Bancorp has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500. Comparatively, First National has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500.

Profitability

This table compares Northeast Bancorp and First National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northeast Bancorp	28.34%	20.02%	2.25%
First National	19.35%	12.21%	1.12%

Summary

Northeast Bancorp beats First National on 11 of the 18 factors compared between the two stocks.

About Northeast Bancorp

Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.

About First National

First National Corporation operates as the bank holding company for First Bank that provides various commercial banking services to small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations in Virginia. The company's deposit products include checking, savings, money market, and individual retirement accounts, as well as certificates of deposit and treasury management solutions. Its loan products comprise construction loans, including residential, land acquisition, and development loans; 1-4 family residential real estate loans; and commercial real estate loans that are secured by commercial real estate, including multi-family residential buildings, office and retail buildings, hotels, industrial buildings, and religious facilities. In addition, the company's loan products include commercial and industrial loans that are secured by business assets, such as accounts receivable, equipment, and inventory; home equity loans; and secured and unsecured consumer loans, such as lines of credit, automobile loans, deposit account loans, and installment and demand loans. Further, it provides wealth management services, including estate planning, investment management of assets, trustee under an agreement, trustee under a will, and estate settlement. Additionally, the company offers title insurance and investment services; and holds other real estate owned and office sites, as well as provides internet and mobile banking, remote deposit capture, and other traditional banking services. First National Corporation was founded in 1907 and is headquartered in Strasburg, Virginia.