First National (NASDAQ:FXNC) vs. Chesapeake Financial Shares (OTCMKTS:CPKF) Financial Analysis

Chesapeake Financial Shares (OTCMKTS:CPKF) and First National (NASDAQ:FXNC) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Dividends

Chesapeake Financial Shares pays an annual dividend of $0.68 per share and has a dividend yield of 2.1%. First National pays an annual dividend of $0.68 per share and has a dividend yield of 2.6%. Chesapeake Financial Shares pays out 31.9% of its earnings in the form of a dividend. First National pays out 34.5% 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. First National has increased its dividend for 10 consecutive years. First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Chesapeake Financial Shares and First National”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chesapeake Financial Shares	$102.27 million	1.49	$10.00 million	$2.13	15.24
First National	$116.51 million	2.05	$17.70 million	$1.97	13.45

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

Profitability

This table compares Chesapeake Financial Shares and First National’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chesapeake Financial Shares	9.78%	14.64%	1.07%
First National	15.19%	11.01%	0.94%

Risk & Volatility

Chesapeake Financial Shares has a beta of 0.25, suggesting that its stock price is 75% less volatile than the S&P 500. Comparatively, First National has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.

Institutional & Insider Ownership

3.7% of Chesapeake Financial Shares shares are held by institutional investors. Comparatively, 33.9% of First National shares are held by institutional investors. 39.5% of Chesapeake Financial Shares shares are held by insiders. Comparatively, 14.3% of First National shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and target prices for Chesapeake Financial Shares and First National, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chesapeake Financial Shares	0	0	0	0	0.00
First National	0	1	0	0	2.00

Summary

First National beats Chesapeake Financial Shares on 9 of the 15 factors compared between the two stocks.

About Chesapeake Financial Shares

Chesapeake Financial Shares, Inc. operates as the bank holding company for Chesapeake Bank that provides various banking products and services for individuals and businesses in the United States. The company accepts interest and noninterest checking, savings, and money market accounts; and variable-rate and fixed-term money market accounts, as well as certificates of deposit. It also offers mortgage, and single-family residential and residential construction loans; commercial loans, which include owner-occupied commercial development, retail, builders/contractors, medical, service and professional, hospitality, nonprofits, marine industry, and agricultural and seafood loans; and consumer and other loans. In addition, the company provides merchant processing, accounts receivable financing, wealth management and trust, and mortgage banking services, as well as cash management services. The company was founded in 1900 and is based in Kilmarnock, Virginia.

About First National

First National Corporation operates as the bank holding company for First Bank that provides various commercial banking services to small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations in Virginia. The company's deposit products include checking, savings, money market, and individual retirement accounts, as well as certificates of deposit and treasury management solutions. Its loan products comprise construction loans, including residential, land acquisition, and development loans; 1-4 family residential real estate loans; and commercial real estate loans that are secured by commercial real estate, including multi-family residential buildings, office and retail buildings, hotels, industrial buildings, and religious facilities. In addition, the company's loan products include commercial and industrial loans that are secured by business assets, such as accounts receivable, equipment, and inventory; home equity loans; and secured and unsecured consumer loans, such as lines of credit, automobile loans, deposit account loans, and installment and demand loans. Further, it provides wealth management services, including estate planning, investment management of assets, trustee under an agreement, trustee under a will, and estate settlement. Additionally, the company offers title insurance and investment services; and holds other real estate owned and office sites, as well as provides internet and mobile banking, remote deposit capture, and other traditional banking services. First National Corporation was founded in 1907 and is headquartered in Strasburg, Virginia.