Financial Analysis: Western New England Bancorp (NASDAQ:WNEB) and NatWest Group (NYSE:NWG)

Western New England Bancorp (NASDAQ:WNEB) and NatWest Group (NYSE:NWG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Profitability

This table compares Western New England Bancorp and NatWest Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western New England Bancorp	13.27%	7.25%	0.65%
NatWest Group	19.11%	13.30%	0.78%

Insider & Institutional Ownership

68.0% of Western New England Bancorp shares are held by institutional investors. Comparatively, 1.3% of NatWest Group shares are held by institutional investors. 6.6% of Western New England Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Western New England Bancorp and NatWest Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western New England Bancorp	$131.13 million	2.05	$15.27 million	$0.89	14.99
NatWest Group	$38.91 billion	1.62	$7.69 billion	$1.88	8.40

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

Volatility and Risk

Western New England Bancorp has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, NatWest Group has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Dividends

Western New England Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 2.1%. NatWest Group pays an annual dividend of $1.21 per share and has a dividend yield of 7.7%. Western New England Bancorp pays out 31.5% of its earnings in the form of a dividend. NatWest Group pays out 64.4% 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.

Analyst Ratings

This is a summary of current ratings and target prices for Western New England Bancorp and NatWest Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western New England Bancorp	0	2	2	0	2.50
NatWest Group	0	4	1	1	2.50

Western New England Bancorp currently has a consensus price target of $15.00, indicating a potential upside of 12.44%. Given Western New England Bancorp’s higher possible upside, equities analysts clearly believe Western New England Bancorp is more favorable than NatWest Group.

Summary

NatWest Group beats Western New England Bancorp on 9 of the 16 factors compared between the two stocks.

About Western New England Bancorp

Western New England Bancorp, Inc. operates as the holding company for Westfield Bank that provides a range of commercial and retail banking products and services to individuals and businesses. The company accepts various deposit accounts, including interest-bearing and noninterest-bearing checking, commercial checking, business, nonprofit and municipal checking, savings, money market and sweep, individual retirement, and other savings accounts; time deposits; certificates of deposit; and interest on lawyer's trust accounts. It also offers residential real estate loans, including first mortgages, home equity loans, and home equity lines, and secured by one-to-four family residential properties; commercial and industrial loans, such as letters of credit, revolving lines of credit, working capital, equipment financing, and term loans; commercial mortgage loans; construction and land development loans; home equity loans comprising home equity revolving loans and lines of credit; and consumer loans, including automobile, spa and pool, collateral, and personal lines of credit. In addition, the company provides automated teller machine (ATM), telephone and online banking, remote deposit capture, cash management, overdraft and safe deposit facility, and night deposit services. The company was formerly known as Westfield Financial, Inc. and changed its name to Western New England Bancorp, Inc. in October 2016. The company was founded in 1853 and is headquartered in Westfield, Massachusetts.

About NatWest Group

NatWest Group plc, together with its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers in the United Kingdom and internationally. It operates through Retail Banking, Private Banking, and Commercial & Institutional segments. The Retail Banking segment offers a range of banking products and related financial services, such as current accounts, mortgages, personal unsecured lending, and personal deposits, as well as mobile and online banking services. The Private Banking segment provides private banking and wealth management products for high-net-worth individuals and their business interests. The Commercial & Institutional segment offers banking and financial solutions to large corporate organisations, multi-nationals, and financial institutions. The company was formerly known as The Royal Bank of Scotland Group plc and changed its name to NatWest Group plc in July 2020. NatWest Group plc was founded in 1727 and is headquartered in Edinburgh, the United Kingdom.