Analyzing Chesapeake Financial Shares (OTCMKTS:CPKF) and SmartFinancial (NASDAQ:SMBK)

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

Institutional & Insider Ownership

3.7% of Chesapeake Financial Shares shares are owned by institutional investors. Comparatively, 58.8% of SmartFinancial shares are owned by institutional investors. 39.5% of Chesapeake Financial Shares shares are owned by insiders. Comparatively, 7.7% of SmartFinancial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Chesapeake Financial Shares	10.11%	9.35%	0.62%
SmartFinancial	9.93%	6.55%	0.62%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Chesapeake Financial Shares and SmartFinancial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chesapeake Financial Shares	0	0	0	0	N/A
SmartFinancial	0	3	1	1	2.60

SmartFinancial has a consensus price target of $27.00, suggesting a potential downside of 9.82%. Given SmartFinancial’s higher possible upside, analysts plainly believe SmartFinancial is more favorable than Chesapeake Financial Shares.

Risk and Volatility

Chesapeake Financial Shares has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, SmartFinancial has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Dividends

Chesapeake Financial Shares pays an annual dividend of $0.62 per share and has a dividend yield of 3.3%. SmartFinancial pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. Chesapeake Financial Shares pays out 31.8% of its earnings in the form of a dividend. SmartFinancial pays out 20.5% 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.

Earnings & Valuation

This table compares Chesapeake Financial Shares and SmartFinancial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chesapeake Financial Shares	$82.72 million	1.08	$10.12 million	$1.95	9.74
SmartFinancial	$151.31 million	3.38	$28.59 million	$1.56	19.19

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

Summary

SmartFinancial beats Chesapeake Financial Shares on 10 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 SmartFinancial

SmartFinancial, Inc. operates as the bank holding company for SmartBank that provides various financial services to individuals and corporate customers in Tennessee, Alabama, and Florida. It operates through Commercial Real Estate, Consumer Real Estate, Construction and Land Development, Commercial and Industrial, Leases, and Consumer and Other segments. The company offers noninterest-bearing and interest-bearing checking, interest-bearing demand, savings, money market, time deposit, individual retirement accounts, as well as certificates of deposit. It also provides commercial and residential real estate, consumer real estate, and construction and land development loans; commercial and financial loans and leases; commercial business and mortgage loans; and direct consumer installment, educational, agriculture, and other revolving credit loans; equipment financing, heavy equipment, semis, and trailers loans and leases to small and mid-size companies; letters of credit; and overdraft facilities. In addition, the company offers wealth management, insurance, mortgage origination, and internet and mobile banking services. SmartFinancial, Inc. is headquartered in Knoxville, Tennessee.