Byline Bancorp (NYSE:BY) vs. Bankwell Financial Group (NASDAQ:BWFG) Critical Analysis

Bankwell Financial Group (NASDAQ:BWFG) and Byline Bancorp (NYSE:BY) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, earnings, analyst recommendations, risk and valuation.

Analyst Recommendations

This is a summary of current recommendations and price targets for Bankwell Financial Group and Byline Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bankwell Financial Group	0	0	1	0	3.00
Byline Bancorp	0	2	2	0	2.50

Bankwell Financial Group presently has a consensus target price of $34.00, suggesting a potential upside of 2.56%. Byline Bancorp has a consensus target price of $29.88, suggesting a potential downside of 4.92%. Given Bankwell Financial Group’s stronger consensus rating and higher probable upside, research analysts clearly believe Bankwell Financial Group is more favorable than Byline Bancorp.

Dividends

Bankwell Financial Group pays an annual dividend of $0.80 per share and has a dividend yield of 2.4%. Byline Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 1.1%. Bankwell Financial Group pays out 41.0% of its earnings in the form of a dividend. Byline Bancorp pays out 13.1% 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.

Insider & Institutional Ownership

35.8% of Bankwell Financial Group shares are owned by institutional investors. Comparatively, 67.7% of Byline Bancorp shares are owned by institutional investors. 19.2% of Bankwell Financial Group shares are owned by insiders. Comparatively, 30.1% of Byline Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Bankwell Financial Group and Byline Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bankwell Financial Group	7.77%	5.74%	0.48%
Byline Bancorp	19.39%	11.90%	1.32%

Earnings & Valuation

This table compares Bankwell Financial Group and Byline Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bankwell Financial Group	$193.30 million	1.35	$36.66 million	$1.95	17.00
Byline Bancorp	$535.79 million	2.60	$107.88 million	$2.75	11.43

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

Volatility and Risk

Bankwell Financial Group has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Byline Bancorp has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Summary

Byline Bancorp beats Bankwell Financial Group on 12 of the 16 factors compared between the two stocks.

About Bankwell Financial Group

Bankwell Financial Group, Inc. operates as the bank holding company for Bankwell Bank that provides various banking services for individual and commercial customers. It offers various traditional depository products, including checking, savings, money market, and certificates of deposit. The company also provides first mortgage loans secured by one-to-four family owner occupied residential properties for personal use; home equity loans and home equity lines of credit secured by owner occupied one-to-four family residential properties; loans secured by commercial real estate, multi-family dwellings, owner-occupied commercial real estate, and investor-owned one-to-four family dwellings; commercial construction loans for commercial development projects, including apartment buildings and condominiums, as well as office buildings, retail, and other income producing properties; land loans; commercial business loans secured by assignments of corporate assets and personal guarantees of the business owners; loans to finance insurance premiums; overdraft lines of credit; and unsecured personal loans. It operates branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut. The company was formerly known as BNC Financial Group, Inc. and changed its name to Bankwell Financial Group, Inc. in September 2013. Bankwell Financial Group, Inc. was founded in 2002 and is headquartered in New Canaan, Connecticut.

About Byline Bancorp

Byline Bancorp, Inc. operates as the bank holding company for Byline Bank that provides various banking products and services for small and medium sized businesses, commercial real estate and financial sponsors, and consumers in the United States. It offers various retail deposit products, including non-interest-bearing accounts, money market demand accounts, savings accounts, interest-bearing checking accounts, and time deposits; ATM and debit cards; and online, mobile, and text banking services, as well as commercial deposits. The company also provides term loans, revolving lines of credit, and construction financing services; senior secured financing solutions to private equity backed lower middle market companies; small business administration and united states department of agriculture loans; and treasury management products and services. In addition, it offers financing solutions for equipment vendors and their end users; syndication services; and investment, trust, and wealth management services that include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services for foundations and endowments, and high net worth individuals. The company was formerly known as Metropolitan Bank Group, Inc. and changed its name to Byline Bancorp, Inc. in 2015. Byline Bancorp, Inc. was founded in 1914 and is headquartered in Chicago, Illinois.