Financial Review: Peoples Financial Services (NASDAQ:PFIS) and NewtekOne (NASDAQ:NEWT)

Peoples Financial Services (NASDAQ:PFIS) and NewtekOne (NASDAQ:NEWT) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Risk & Volatility

Peoples Financial Services has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, NewtekOne has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.

Institutional and Insider Ownership

31.7% of Peoples Financial Services shares are owned by institutional investors. Comparatively, 38.3% of NewtekOne shares are owned by institutional investors. 4.1% of Peoples Financial Services shares are owned by insiders. Comparatively, 6.4% of NewtekOne shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Peoples Financial Services pays an annual dividend of $2.47 per share and has a dividend yield of 5.3%. NewtekOne pays an annual dividend of $0.76 per share and has a dividend yield of 5.7%. Peoples Financial Services pays out 102.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NewtekOne pays out 49.0% of its earnings in the form of a dividend. NewtekOne is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Peoples Financial Services and NewtekOne’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Financial Services	10.07%	5.93%	0.54%
NewtekOne	14.94%	18.99%	2.96%

Analyst Recommendations

This is a breakdown of current recommendations for Peoples Financial Services and NewtekOne, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Financial Services	0	2	0	0	2.00
NewtekOne	0	3	0	0	2.00

Peoples Financial Services currently has a consensus price target of $45.00, indicating a potential downside of 2.56%. NewtekOne has a consensus price target of $12.33, indicating a potential downside of 7.06%. Given Peoples Financial Services’ higher probable upside, analysts clearly believe Peoples Financial Services is more favorable than NewtekOne.

Earnings & Valuation

This table compares Peoples Financial Services and NewtekOne”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Financial Services	$163.98 million	2.81	$27.38 million	$2.41	19.16
NewtekOne	$206.40 million	1.59	$47.33 million	$1.55	8.56

NewtekOne has higher revenue and earnings than Peoples Financial Services. NewtekOne is trading at a lower price-to-earnings ratio than Peoples Financial Services, indicating that it is currently the more affordable of the two stocks.

Summary

NewtekOne beats Peoples Financial Services on 10 of the 14 factors compared between the two stocks.

About Peoples Financial Services

Peoples Financial Services Corp. operates as the bank holding company for Peoples Security Bank and Trust Company that provides various commercial and retail banking services. The company accepts money market, negotiable order of withdrawal, savings, individual retirement, demand deposit, and certificates of deposit accounts. It also provides residential real estate, automobile, manufactured housing, personal, and home equity loans; and commercial real estate, working capital, construction, small business administration, and agricultural loans, as well as loans for equipment and other commercial needs, and mineral rights. In addition, the company offers fiduciary and investment services; investment management, IRA trustee, estate administration, living and life insurance trust, trustee under will, guardianship, custodial/IRA custodial, and corporate trust services, as well as pension and profit-sharing plans. Further, it provides wealth management products and services comprising investment portfolio management, estate and business succession planning, annuities, insurance, retirement plan, and tax planning, as well as education funding strategies; and securities, brokerage, and investor services. Additionally, the company offers small business checking and merchant money market accounts, online and telephone banking, business credit cards, merchant line of credit, and financial checkup services; and remote deposit capture, automatic clearing house transaction, cash management, automated teller machine, point of sale transaction, safe deposit box, night depository, direct deposit, and official check services. It serves business, non-profit, governmental, municipal agency, and professional customers, as well as retail customers. Peoples Financial Services Corp. was founded in 1905 and is headquartered in Scranton, Pennsylvania.

About NewtekOne

NewtekOne, Inc. operates as the bank holding company for Newtek Bank, National Association that engages in the provision of various business and financial solutions under the Newtek brand name to the small- and medium-sized business market. The company accepts demand, savings, NOW, money market, and time deposits; and provides loans including SBA loans, commercial and industrial loans, and commercial real estate loans. It is also involved in the provision of electronic payment processing services comprising credit and debit card processing services, check approval services, processing equipment, and software, as well as cloud-based Point of Sale systems for a various restaurant, retail, assisted living, taxi cabs, parks, and golf course businesses. In addition, it offers wholesale brokerage insurance agency services; and payroll management, and related payment and tax reporting services to independent business owners. Further, the company provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, ecommerce, data storage, backup and disaster recovery, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients as well as SMBs. The company was formerly known as Newtek Business Services Corp. and changed its name to NewtekOne, Inc. in January 2023. NewtekOne, Inc. was founded in 1998 and is headquartered in Boca Raton, Florida.