Financial Analysis: Capital Bancorp (NASDAQ:CBNK) & Community Heritage Financial (OTCMKTS:CMHF)

Community Heritage Financial (OTCMKTS:CMHF) and Capital Bancorp (NASDAQ:CBNK) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Insider & Institutional Ownership

12.2% of Community Heritage Financial shares are owned by institutional investors. Comparatively, 56.1% of Capital Bancorp shares are owned by institutional investors. 32.5% of Capital Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Community Heritage Financial has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Capital Bancorp has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Dividends

Community Heritage Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Capital Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 1.5%. Community Heritage Financial pays out 10.9% of its earnings in the form of a dividend. Capital Bancorp pays out 14.1% 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. Capital Bancorp has increased its dividend for 3 consecutive years. Capital Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Community Heritage Financial and Capital Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community Heritage Financial	N/A	N/A	N/A
Capital Bancorp	18.44%	14.76%	1.67%

Analyst Recommendations

This is a summary of current recommendations for Community Heritage Financial and Capital Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Heritage Financial	0	0	0	0	0.00
Capital Bancorp	0	3	2	0	2.40

Capital Bancorp has a consensus price target of $34.67, suggesting a potential upside of 8.33%. Given Capital Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Capital Bancorp is more favorable than Community Heritage Financial.

Valuation & Earnings

This table compares Community Heritage Financial and Capital Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Heritage Financial	$60.49 million	1.50	$8.61 million	$2.94	10.51
Capital Bancorp	$310.06 million	1.70	$57.17 million	$3.40	9.41

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

Summary

Capital Bancorp beats Community Heritage Financial on 15 of the 17 factors compared between the two stocks.

About Community Heritage Financial

Community Heritage Financial, Inc. operates as the bank holding company for Middletown Valley Bank that provides retail and commercial banking services to individuals and businesses in Frederick and Washington counties in Maryland and Franklin County, Pennsylvania. Its primary deposit products include demand, savings, and time deposits, as well as lending products comprise real estate mortgages, commercial business loans, and instalment loans. The company also offers mortgage financing, new home purchases, refinancing, and construction lending in Middletown, Crofton, and Oakland, Maryland. The company was founded in 1908 and is based in Middletown, Maryland.

About Capital Bancorp

Capital Bancorp, Inc. operates as the bank holding company for Capital Bank, N.A. that provides various banking products and services to businesses, not-for-profit associations, and entrepreneurs in Maryland, Virginia, and the District of Columbia. It operates through Commercial Banking, Capital Bank Home Loans, and OpenSky segments. The company offers a range of deposit products, including checking and savings, time, interest bearing and noninterest-bearing demand, and money market accounts, as well as certificates of deposit; and credit cards. It also originates residential mortgages; issues trust preferred securities; and provides residential and commercial real estate, construction, and commercial and industrial loans, as well as other consumer loans, such as term loans, car loans, and boat loans to small to medium-sized businesses, professionals, real estate investors, and small residential builders and individuals. Capital Bancorp, Inc. was founded in 1974 and is headquartered in Rockville, Maryland.