Head to Head Analysis: Bank Mutual (BKMU) vs. Summit Financial Group (SMMF)

Bank Mutual (NASDAQ: BKMU) and Summit Financial Group (NASDAQ:SMMF) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.

Insider and Institutional Ownership

54.8% of Bank Mutual shares are owned by institutional investors. Comparatively, 22.9% of Summit Financial Group shares are owned by institutional investors. 10.0% of Bank Mutual shares are owned by company insiders. Comparatively, 22.8% of Summit Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Bank Mutual and Summit Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bank Mutual $109.99 million 4.50 $16.95 million $0.34 31.62
Summit Financial Group $75.69 million 4.33 $17.29 million $1.20 21.96

Summit Financial Group has lower revenue, but higher earnings than Bank Mutual. Summit Financial Group is trading at a lower price-to-earnings ratio than Bank Mutual, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Bank Mutual and Summit Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank Mutual 14.19% 5.72% 0.62%
Summit Financial Group 15.35% 11.72% 1.06%

Analyst Recommendations

This is a summary of recent recommendations for Bank Mutual and Summit Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank Mutual 0 2 0 0 2.00
Summit Financial Group 0 2 0 0 2.00

Bank Mutual currently has a consensus price target of $10.75, indicating a potential upside of 0.00%. Summit Financial Group has a consensus price target of $26.50, indicating a potential upside of 0.57%. Given Summit Financial Group’s higher probable upside, analysts plainly believe Summit Financial Group is more favorable than Bank Mutual.

Volatility and Risk

Bank Mutual has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, Summit Financial Group has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.

Dividends

Bank Mutual pays an annual dividend of $0.22 per share and has a dividend yield of 2.0%. Summit Financial Group pays an annual dividend of $0.44 per share and has a dividend yield of 1.7%. Bank Mutual pays out 64.7% of its earnings in the form of a dividend. Summit Financial Group pays out 36.7% 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.

Summary

Summit Financial Group beats Bank Mutual on 9 of the 14 factors compared between the two stocks.

Bank Mutual Company Profile

Bank Mutual Corporation is a savings and loan holding company. The Company owns Bank Mutual (the Bank), a federally-chartered savings bank. The Bank is engaged in the business of community banking, which includes attracting deposits from and making loans to the general public and private businesses, as well as governmental and non-profit entities. In addition to deposits, the Bank obtains funds through borrowings from the Federal Home Loan Bank (FHLB) of Chicago. These funding sources are used to originate loans, including commercial and industrial loans, multi-family residential loans, non-residential commercial real estate loans, one- to four-family loans, home equity loans and other consumer loans. The Bank also purchases and/or participates in loans from third-party financial institutions and is a seller of residential loans in the secondary market. It also invests in mortgage-related and other investment securities.

Summit Financial Group Company Profile

Summit Financial Group, Inc. (Summit) is a financial holding company. The Company provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Shenandoah Valley, and Northern region of Virginia. The Company provides these services through its community bank subsidiary, Summit Community Bank (Summit Community or the Bank). The Company operates through two segments: community banking, and insurance & financial services. The community banking segment consists of its full service banks, which offer customers traditional banking products and services through various delivery channels. The insurance & financial services segment includes three insurance agency offices that sell insurance products. The Company also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia, which provides insurance brokerage services to individuals and businesses.

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