Financial Comparison: Webster Financial (NYSE:WBS) and Shore Bancshares (NASDAQ:SHBI)

Shore Bancshares (NASDAQ:SHBI) and Webster Financial (NYSE:WBS) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.

Volatility & Risk

Shore Bancshares has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Webster Financial has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Institutional and Insider Ownership

59.8% of Shore Bancshares shares are owned by institutional investors. Comparatively, 85.6% of Webster Financial shares are owned by institutional investors. 8.6% of Shore Bancshares shares are owned by company insiders. Comparatively, 0.9% 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 stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Shore Bancshares and Webster Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shore Bancshares	0	2	0	0	2.00
Webster Financial	0	1	9	0	2.90

Shore Bancshares presently has a consensus target price of $15.00, suggesting a potential upside of 12.78%. Webster Financial has a consensus target price of $56.40, suggesting a potential upside of 24.64%. Given Webster Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Webster Financial is more favorable than Shore Bancshares.

Dividends

Shore Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 3.6%. Webster Financial pays an annual dividend of $1.60 per share and has a dividend yield of 3.5%. Shore Bancshares 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. Webster Financial pays out 32.8% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Shore Bancshares and Webster Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shore Bancshares	$247.24 million	1.79	$11.23 million	$0.58	22.93
Webster Financial	$2.59 billion	2.99	$867.84 million	$4.88	9.27

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Shore Bancshares	7.18%	8.37%	0.73%
Webster Financial	19.81%	11.81%	1.31%

Summary

Webster Financial beats Shore Bancshares on 13 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 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.