Head to Head Review: ConnectOne Bancorp (NASDAQ:CNOB) and Shore Bancshares (NASDAQ:SHBI)

Shore Bancshares (NASDAQ:SHBI) and ConnectOne Bancorp (NASDAQ:CNOB) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Shore Bancshares and ConnectOne Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shore Bancshares	0	2	2	0	2.50
ConnectOne Bancorp	0	1	2	0	2.67

Shore Bancshares currently has a consensus target price of $20.00, indicating a potential upside of 24.46%. ConnectOne Bancorp has a consensus target price of $30.25, indicating a potential upside of 19.19%. Given Shore Bancshares’ higher probable upside, analysts clearly believe Shore Bancshares is more favorable than ConnectOne Bancorp.

Profitability

This table compares Shore Bancshares and ConnectOne Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shore Bancshares	15.98%	10.98%	0.99%
ConnectOne Bancorp	6.85%	7.12%	0.79%

Institutional & Insider Ownership

59.8% of Shore Bancshares shares are held by institutional investors. Comparatively, 67.7% of ConnectOne Bancorp shares are held by institutional investors. 8.7% of Shore Bancshares shares are held by company insiders. Comparatively, 6.2% of ConnectOne Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Shore Bancshares and ConnectOne Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shore Bancshares	$326.48 million	1.64	$43.89 million	$1.61	9.98
ConnectOne Bancorp	$288.35 million	4.42	$73.79 million	$0.87	29.17

ConnectOne Bancorp has lower revenue, but higher earnings than Shore Bancshares. Shore Bancshares is trading at a lower price-to-earnings ratio than ConnectOne Bancorp, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Shore Bancshares has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, ConnectOne Bancorp has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Dividends

Shore Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 3.0%. ConnectOne Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 2.8%. Shore Bancshares pays out 29.8% of its earnings in the form of a dividend. ConnectOne Bancorp pays out 82.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ConnectOne Bancorp has raised its dividend for 4 consecutive years. Shore Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Shore Bancshares beats ConnectOne Bancorp on 9 of the 16 factors compared between the two stocks.

About Shore Bancshares

Shore Bancshares, Inc. operates as a bank holding company for the Shore United Bank, N.A. that provides various commercial and consumer banking products and services to individuals, businesses, and other organizations. It offers checking, savings, overnight investment sweep, and money market accounts; and regular and IRA certificates of deposit, as well as CDARS programs and cash management services. The company also provides commercial loans, such as secured and unsecured loans, working capital loans, lines of credit, term loans, accounts receivable financing, real estate acquisition and development loans, construction loans, and letters of credit; residential real estate construction loans; residential mortgage loans; and loans to consumers, including home equity, automobile, installment, home improvement, and personal lines of credit, as well as other consumer financing products. In addition, it offers trust, asset management, and financial planning services; treasury management services, such as merchant card processing, remote deposit capture, and ACH origination, as well as telephone, mobile, and Internet banking services; safe deposit boxes; debit and credit cards; and automatic teller machine services. Shore Bancshares, Inc. was founded in 1876 and is headquartered in Easton, Maryland.

About ConnectOne Bancorp

ConnectOne Bancorp, Inc. operates as the bank holding company for ConnectOne Bank that provides commercial banking products and services for small and mid-sized businesses, local professionals, and individuals in the New York Metropolitan area and South Florida market. The company offers personal and business checking, money market, and time and savings accounts; credit cards, wire transfers, safe deposit boxes, automated teller services and telephone, and internet and mobile banking. It provides retirement accounts, consumers and cash management services for business clients, including treasury direct, automated clearing house, remote deposit capture, and digital invoicing. In addition, the company offers consumer and commercial business loans, including lines of credit, commercial and residential mortgages, home equity and bridge loans, and other personal loans; commercial loans secured by collateral, such as business assets comprising accounts receivable, inventory and equipment, and mortgages filed on commercial and residential real estate, as well as cash balances and marketable securities. Further, it provides real estate loans, which includes loans secured by first liens on completed commercial properties, including multi-family properties, to purchase or refinance properties; residential mortgages, such as loans secured by first liens on 1-4 family and condominium; and cooperative residential real estate loans. The company was formerly known as Center Bancorp, Inc. and changed its name to ConnectOne Bancorp, Inc. in July 2014. ConnectOne Bancorp, Inc. was incorporated in 1982 and is headquartered in Englewood Cliffs, New Jersey.