Financial Analysis: Cambridge Bancorp (NASDAQ:CATC) versus First National (NASDAQ:FXNC)

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

Analyst Ratings

This is a breakdown of current recommendations for First National and Cambridge Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First National	0	1	0	0	2.00
Cambridge Bancorp	0	1	1	0	2.50

First National presently has a consensus price target of $19.00, suggesting a potential upside of 25.08%. Cambridge Bancorp has a consensus price target of $73.15, suggesting a potential upside of 6.01%. Given First National’s higher possible upside, research analysts plainly believe First National is more favorable than Cambridge Bancorp.

Valuation & Earnings

This table compares First National and Cambridge Bancorp’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First National	$69.50 million	1.37	$9.62 million	$1.43	10.62
Cambridge Bancorp	$260.26 million	2.08	$34.11 million	$3.63	19.01

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

Institutional and Insider Ownership

33.9% of First National shares are owned by institutional investors. Comparatively, 55.5% of Cambridge Bancorp shares are owned by institutional investors. 16.5% of First National shares are owned by company insiders. Comparatively, 4.5% of Cambridge Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

First National pays an annual dividend of $0.60 per share and has a dividend yield of 3.9%. Cambridge Bancorp pays an annual dividend of $2.68 per share and has a dividend yield of 3.9%. First National pays out 42.0% of its earnings in the form of a dividend. Cambridge Bancorp pays out 73.8% 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. Cambridge Bancorp has increased its dividend for 25 consecutive years. First National is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First National	12.21%	7.83%	0.64%
Cambridge Bancorp	10.11%	6.67%	0.65%

Risk and Volatility

First National has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Cambridge Bancorp has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Summary

Cambridge Bancorp beats First National on 11 of the 17 factors compared between the two stocks.

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.

About Cambridge Bancorp

Cambridge Bancorp operates as the bank holding company for Cambridge Trust Company that engages in the provision of commercial and consumer banking, and investment management and trust services. The company accepts various deposits, such as checking, savings, money market, trust, and individual retirement accounts, as well as time and demand deposits, and certificates of deposit. Its loan products include residential and commercial real estate loans; construction loan; residential mortgages and home equity loans; commercial and industrial loans; consumer loans, such as secured and unsecured loans, lines of credit, and personal installment loans; and construction loans. The company also offers cash management, debit and credit cards, online and mobile banking, and payments services. It serves commercial enterprises, non-profit organizations, and individuals. The company operates through a network of banking and wealth management offices located in Massachusetts and New Hampshire. Cambridge Bancorp was founded in 1890 and is headquartered in Cambridge, Massachusetts.