NewtekOne (NASDAQ:NEWT) versus National Bankshares (NASDAQ:NKSH) Critical Review

NewtekOne (NASDAQ:NEWT) and National Bankshares (NASDAQ:NKSH) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Valuation and Earnings

This table compares NewtekOne and National Bankshares’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewtekOne	$271.46 million	1.27	$47.33 million	$1.55	8.99
National Bankshares	$68.19 million	2.66	$15.69 million	$2.26	13.61

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

Insider & Institutional Ownership

38.4% of NewtekOne shares are owned by institutional investors. Comparatively, 29.7% of National Bankshares shares are owned by institutional investors. 6.4% of NewtekOne shares are owned by insiders. Comparatively, 2.8% of National Bankshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares NewtekOne and National Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NewtekOne	14.14%	18.27%	2.77%
National Bankshares	19.00%	10.17%	0.81%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for NewtekOne and National Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewtekOne	0	3	1	0	2.25
National Bankshares	0	0	0	0	N/A

NewtekOne presently has a consensus price target of $14.50, suggesting a potential upside of 5.07%. Given NewtekOne’s higher possible upside, equities analysts plainly believe NewtekOne is more favorable than National Bankshares.

Volatility & Risk

NewtekOne has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, National Bankshares has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Dividends

NewtekOne pays an annual dividend of $0.76 per share and has a dividend yield of 5.5%. National Bankshares pays an annual dividend of $1.46 per share and has a dividend yield of 4.7%. NewtekOne pays out 49.0% of its earnings in the form of a dividend. National Bankshares pays out 64.6% 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. NewtekOne is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

NewtekOne beats National Bankshares on 11 of the 15 factors compared between the two stocks.

About NewtekOne

NewtekOne, Inc. operates as the bank holding company for Newtek Bank, National Association that engages in the provision of various business and financial solutions under the Newtek brand name to the small- and medium-sized business market. The company accepts demand, savings, NOW, money market, and time deposits; and provides loans including SBA loans, commercial and industrial loans, and commercial real estate loans. It is also involved in the provision of electronic payment processing services comprising credit and debit card processing services, check approval services, processing equipment, and software, as well as cloud-based Point of Sale systems for a various restaurant, retail, assisted living, taxi cabs, parks, and golf course businesses. In addition, it offers wholesale brokerage insurance agency services; and payroll management, and related payment and tax reporting services to independent business owners. Further, the company provides website hosting, dedicated server hosting, cloud hosting, web design and development, internet marketing, ecommerce, data storage, backup and disaster recovery, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients as well as SMBs. The company was formerly known as Newtek Business Services Corp. and changed its name to NewtekOne, Inc. in January 2023. NewtekOne, Inc. was founded in 1998 and is headquartered in Boca Raton, Florida.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.