Analyzing Eagle Financial Services (NASDAQ:EFSI) and Pinnacle Bankshares (OTCMKTS:PPBN)

Pinnacle Bankshares (OTCMKTS:PPBN) and Eagle Financial Services (NASDAQ:EFSI) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, risk and valuation.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Pinnacle Bankshares and Eagle Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Bankshares	0	0	0	0	0.00
Eagle Financial Services	0	3	2	0	2.40

Eagle Financial Services has a consensus price target of $43.00, suggesting a potential upside of 24.89%. Given Eagle Financial Services’ stronger consensus rating and higher possible upside, analysts plainly believe Eagle Financial Services is more favorable than Pinnacle Bankshares.

Dividends

Pinnacle Bankshares pays an annual dividend of $1.12 per share and has a dividend yield of 2.4%. Eagle Financial Services pays an annual dividend of $1.24 per share and has a dividend yield of 3.6%. Pinnacle Bankshares pays out 23.1% of its earnings in the form of a dividend. Eagle Financial Services pays out 95.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Financial Services has increased its dividend for 14 consecutive years. Eagle Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Pinnacle Bankshares and Eagle Financial Services”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Bankshares	$59.05 million	1.70	$10.77 million	$4.84	9.61
Eagle Financial Services	$105.89 million	1.75	$8.21 million	$1.30	26.48

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

Volatility & Risk

Pinnacle Bankshares has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500. Comparatively, Eagle Financial Services has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500.

Profitability

This table compares Pinnacle Bankshares and Eagle Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle Bankshares	18.24%	12.74%	1.04%
Eagle Financial Services	7.76%	9.99%	0.92%

Insider & Institutional Ownership

3.8% of Pinnacle Bankshares shares are held by institutional investors. Comparatively, 0.3% of Eagle Financial Services shares are held by institutional investors. 6.5% of Pinnacle Bankshares shares are held by company insiders. Comparatively, 12.3% of Eagle Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Eagle Financial Services beats Pinnacle Bankshares on 9 of the 17 factors compared between the two stocks.

About Pinnacle Bankshares

Pinnacle Bankshares Corporation operates as the bank holding company for First National Bank that provides a range of commercial and retail banking products and services. The company accepts checking accounts, savings and time deposits, individual retirement accounts, certificates of deposit, and money market accounts. Its loan products include residential and commercial mortgage loans, home equity loans, consumer installment loans, agricultural loans, investment loans, small business loans, commercial lines of credit, and letters of credit. The company also provides credit cards; insurance products, including property and casualty, life, and health; investment and annuity products; and overdraft protection, merchant bankcard processing, cash management, remote deposit capture, night drop, safe deposit boxes, and notary services, as well as telephone, mobile, and online banking services. It operates branches in Amherst County, Bedford County, Campbell County, Pittsylvania County; and the city of Danville, Lynchburg and Charlottesville. The company was founded in 1908 and is headquartered in Altavista, Virginia.

About Eagle Financial Services

Eagle Financial Services, Inc. operates as the bank holding company for Bank of Clarke County that provides various retail and commercial banking products and services in the Shenandoah Valley and Northern Virginia. The company’s deposit products include checking, NOW, money market, and regular savings accounts; and demand and time deposits. Its loan portfolio comprises one-to-four-family residential real estate, commercial real estate, construction and land development, and commercial and industrial loans, as well as secured and unsecured consumer loans, which include personal installment loans, personal lines of credit, automobile loans, and credit card loans. The company also offers personal and retirement plan services; investment services comprising tax-deferred annuities, IRAs and rollovers, mutual funds, retirement plans, college savings plans, life insurance, long term care insurance, fixed income investing, brokerage CDs, and full service or discount brokerage services; non-deposit investment products; and title insurance products. In addition, it provides ATM and debit cards; and telephone, internet, and mobile banking services, as well as other commercial deposit account services, such as ACH origination and remote deposit capture services. The company operates through twelve full-service branches, two loan production offices, one wealth management office, and one drive-through only facility, as well as 13 ATM locations in the Virginia communities of Berryville, Winchester, Boyce, Stephens City, Purcellville, Warrenton, Leesburg, Ashburn, and Fairfax. Eagle Financial Services, Inc. was founded in 1881 and is headquartered in Berryville, Virginia.