Comparing Dime Community Bancshares (NASDAQ:DCOM) & National Bankshares (NASDAQ:NKSH)

Dime Community Bancshares (NASDAQ:DCOM) and National Bankshares (NASDAQ:NKSH) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Valuation & Earnings

This table compares Dime Community Bancshares and National Bankshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dime Community Bancshares	$473.00 million	3.63	$110.68 million	$2.66	14.65
National Bankshares	$85.32 million	2.64	$15.83 million	$2.75	12.84

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

Volatility & Risk

Dime Community Bancshares has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, National Bankshares has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500.

Profitability

This table compares Dime Community Bancshares and National Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dime Community Bancshares	15.15%	9.12%	0.83%
National Bankshares	20.39%	10.38%	1.03%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Dime Community Bancshares and National Bankshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dime Community Bancshares	0	2	3	1	2.83
National Bankshares	0	0	1	1	3.50

Dime Community Bancshares currently has a consensus target price of $39.75, indicating a potential upside of 2.00%. Given Dime Community Bancshares’ higher possible upside, research analysts plainly believe Dime Community Bancshares is more favorable than National Bankshares.

Insider & Institutional Ownership

75.3% of Dime Community Bancshares shares are owned by institutional investors. Comparatively, 29.7% of National Bankshares shares are owned by institutional investors. 7.4% of Dime Community Bancshares shares are owned by company insiders. Comparatively, 3.3% of National Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Dime Community Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.6%. National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 4.2%. Dime Community Bancshares pays out 37.6% of its earnings in the form of a dividend. National Bankshares pays out 54.5% 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. Dime Community Bancshares has increased its dividend for 2 consecutive years.

Summary

Dime Community Bancshares beats National Bankshares on 11 of the 17 factors compared between the two stocks.

About Dime Community Bancshares

Dime Community Bancshares, Inc. operates as the holding company for Dime Community Bank that engages in the provision of various commercial banking and financial services. The company accepts time, savings, and demand deposits from the businesses, consumers, and local municipalities. It also offers commercial real estate loans; multi-family mortgage loans; residential mortgage loans; letters of credit; secured and unsecured commercial and consumer loans; lines of credit; home equity loans; and construction and land loans. In addition, the company invests in Federal Home Loan Bank, Federal National Mortgage Association, Government National Mortgage Association, and Federal Home Loan Mortgage Corporation mortgage-backed securities, collateralized mortgage obligations, and other asset backed securities; U.S. Treasury securities; New York state and local municipal obligations; U.S. government-sponsored enterprise securities; and corporate bonds. Further, it offers certificate of deposit account registry services and insured cash sweep programs; federal deposit insurance corporation insurance; merchant credit and debit card processing, automated teller machines, cash management services, lockbox processing, online banking services, remote deposit capture, safe deposit boxes, and individual retirement accounts; investment products and services through a third-party broker dealer; and title insurance broker services for small and medium sized businesses, and municipal and consumer relationships. The company was founded in 1910 and is headquartered in Hauppauge, New York.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.