Critical Contrast: Danske Bank (OTCMKTS:DNKEY) vs. Towne Bank (NASDAQ:TOWN)

Towne Bank (NASDAQ:TOWN) and Danske Bank (OTCMKTS:DNKEY) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Dividends

Towne Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.2%. Danske Bank pays an annual dividend of $1.58 per share and has a dividend yield of 5.9%. Towne Bank pays out 31.5% of its earnings in the form of a dividend. Danske Bank pays out 69.9% 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. Towne Bank has raised its dividend for 13 consecutive years.

Profitability

This table compares Towne Bank and Danske Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Towne Bank	25.64%	9.60%	1.22%
Danske Bank	40.85%	13.80%	0.63%

Risk and Volatility

Towne Bank has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Danske Bank has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Towne Bank and Danske Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	0	2	2	0	2.50
Danske Bank	0	4	3	0	2.43

Towne Bank currently has a consensus target price of $39.50, suggesting a potential upside of 11.96%. Given Towne Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Towne Bank is more favorable than Danske Bank.

Valuation and Earnings

This table compares Towne Bank and Danske Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$1.12 billion	2.49	$169.53 million	$3.56	9.91
Danske Bank	$8.61 billion	5.04	$3.49 billion	$2.26	11.75

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

Institutional and Insider Ownership

56.0% of Towne Bank shares are owned by institutional investors. 8.1% of Towne Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Towne Bank beats Danske Bank on 9 of the 17 factors compared between the two stocks.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.

About Danske Bank

Danske Bank A/S provides various banking products and services to corporate, institutional, and international clients. The company offers insurance and pension products, mortgage finance and real-estate brokerage services, asset management and trading services in fixed income products, foreign exchange services, and equities. It also provides advisory services to personal and private banking customers; and business advisory services, including acquisition, change of ownership, strategic development, or international expansion. In addition, the company offers financing, risk management, investment, and financial advisory services for large corporates and institutions; healthcare solutions; and online and mobile banking services. It has operations in Denmark, Finland, Sweden, Norway, the United Kingdom, and internationally. The company was founded in 1871 and is headquartered in Copenhagen, Denmark.