Critical Analysis: Quaint Oak Bancorp (OTCMKTS:QNTO) versus Webster Financial (NYSE:WBS)

Quaint Oak Bancorp (OTCMKTS:QNTO) and Webster Financial (NYSE:WBS) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Volatility and Risk

Quaint Oak Bancorp has a beta of -0.09, suggesting that its stock price is 109% less volatile than the S&P 500. Comparatively, Webster Financial has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Quaint Oak Bancorp and Webster Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaint Oak Bancorp	0	0	0	0	0.00
Webster Financial	1	11	4	0	2.19

Webster Financial has a consensus price target of $73.96, indicating a potential upside of 2.40%. Given Webster Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Webster Financial is more favorable than Quaint Oak Bancorp.

Institutional & Insider Ownership

8.6% of Quaint Oak Bancorp shares are owned by institutional investors. Comparatively, 85.6% of Webster Financial shares are owned by institutional investors. 28.6% of Quaint Oak Bancorp shares are owned by company insiders. Comparatively, 0.5% of Webster Financial 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.

Dividends

Quaint Oak Bancorp pays an annual dividend of $0.16 per share and has a dividend yield of 1.0%. Webster Financial pays an annual dividend of $1.60 per share and has a dividend yield of 2.2%. Quaint Oak Bancorp pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Webster Financial pays out 26.2% of its earnings in the form of a dividend. Webster Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Quaint Oak Bancorp and Webster Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quaint Oak Bancorp	$47.79 million	0.93	$320,000.00	$0.21	79.76
Webster Financial	$4.42 billion	2.65	$1.00 billion	$6.11	11.82

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

Profitability

This table compares Quaint Oak Bancorp and Webster Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quaint Oak Bancorp	1.19%	1.09%	0.08%
Webster Financial	22.95%	11.31%	1.24%

Summary

Webster Financial beats Quaint Oak Bancorp on 14 of the 16 factors compared between the two stocks.

About Quaint Oak Bancorp

Quaint Oak Bancorp, Inc. operates as the holding company for Quaint Oak Bank that provides banking products and services in Pennsylvania. It offers various deposit products, including money market accounts, certificates of deposit, interest and non-interest-bearing checking accounts for businesses and consumers, and savings accounts. The company also provides residential and commercial mortgage loans, construction loans, commercial business loans, home equity loans, and lines of credit; mortgage banking, real estate sales, title abstract, and insurance services; and multi-state equipment financing services. It serves its customers through offices, as well as correspondence, telephone, and online banking. Quaint Oak Bancorp, Inc. was incorporated in 1926 and is headquartered in Southampton, Pennsylvania.

About Webster Financial

Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of financial products and services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Consumer Banking. The Commercial Banking segment offers commercial real estate and equipment financing, business banking, asset-based lending, and commercial services; public sector finance; mortgage warehouse financing; sponsor and specialty financing services; credit, deposit, and cash flow management services; and wealth management solutions to business owners and operators, including trust, asset management, financial planning, insurance, retirement, and investment products, as well as treasury management services comprising derivative, treasury, accounts payable, accounts receivable, and trade products and services. This segment also provides commercial services, such as accounts receivable factoring and trade financing, payroll funding, and business process outsourcing. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter benefit services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. The Consumer Banking segment provides consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers; and small business banking products, such as credit, deposit, and cash flow management products to businesses and professional service firms. The company offers online and mobile banking services. Webster Financial Corporation was founded in 1935 and is headquartered in Stamford, Connecticut.