Critical Review: Peoples Financial Services (NASDAQ:PFIS) versus NatWest Group (NYSE:NWG)

Peoples Financial Services (NASDAQ:PFIS) and NatWest Group (NYSE:NWG) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Volatility and Risk

Peoples Financial Services has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500. Comparatively, NatWest Group has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Peoples Financial Services and NatWest Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Financial Services	0	2	1	0	2.33
NatWest Group	0	3	4	1	2.75

Peoples Financial Services presently has a consensus target price of $65.50, indicating a potential downside of 8.90%. Given Peoples Financial Services’ higher possible upside, analysts plainly believe Peoples Financial Services is more favorable than NatWest Group.

Valuation & Earnings

This table compares Peoples Financial Services and NatWest Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Financial Services	$195.82 million	3.68	$59.19 million	$8.83	8.14
NatWest Group	$38.91 billion	1.89	$7.69 billion	$2.01	9.18

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

Profitability

This table compares Peoples Financial Services and NatWest Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Financial Services	20.66%	17.27%	1.70%
NatWest Group	20.10%	14.01%	0.82%

Dividends

Peoples Financial Services pays an annual dividend of $2.50 per share and has a dividend yield of 3.5%. NatWest Group pays an annual dividend of $0.63 per share and has a dividend yield of 3.4%. Peoples Financial Services pays out 28.3% of its earnings in the form of a dividend. NatWest Group pays out 31.3% 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. Peoples Financial Services has increased its dividend for 8 consecutive years. Peoples Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

31.7% of Peoples Financial Services shares are held by institutional investors. Comparatively, 1.3% of NatWest Group shares are held by institutional investors. 8.2% of Peoples Financial Services shares are held 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.

Summary

Peoples Financial Services beats NatWest Group on 11 of the 18 factors compared between the two stocks.

About Peoples Financial Services

Peoples Financial Services Corp. operates as the bank holding company for Peoples Security Bank and Trust Company that provides various commercial and retail banking services. The company accepts money market, negotiable order of withdrawal, savings, individual retirement, demand deposit, and certificates of deposit accounts. It also provides residential real estate, automobile, manufactured housing, personal, and home equity loans; and commercial real estate, working capital, construction, small business administration, and agricultural loans, as well as loans for equipment and other commercial needs, and mineral rights. In addition, the company offers fiduciary and investment services; investment management, IRA trustee, estate administration, living and life insurance trust, trustee under will, guardianship, custodial/IRA custodial, and corporate trust services, as well as pension and profit-sharing plans. Further, it provides wealth management products and services comprising investment portfolio management, estate and business succession planning, annuities, insurance, retirement plan, and tax planning, as well as education funding strategies; and securities, brokerage, and investor services. Additionally, the company offers small business checking and merchant money market accounts, online and telephone banking, business credit cards, merchant line of credit, and financial checkup services; and remote deposit capture, automatic clearing house transaction, cash management, automated teller machine, point of sale transaction, safe deposit box, night depository, direct deposit, and official check services. It serves business, non-profit, governmental, municipal agency, and professional customers, as well as retail customers. Peoples Financial Services Corp. was founded in 1905 and is headquartered in Scranton, Pennsylvania.

About NatWest Group

NatWest Group plc, together with its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers in the United Kingdom and internationally. It operates through Retail Banking, Private Banking, and Commercial & Institutional segments. The Retail Banking segment offers a range of banking products and related financial services, such as current accounts, mortgages, personal unsecured lending, and personal deposits, as well as mobile and online banking services. The Private Banking segment provides private banking and wealth management products for high-net-worth individuals and their business interests. The Commercial & Institutional segment offers banking and financial solutions to large corporate organisations, multi-nationals, and financial institutions. The company was formerly known as The Royal Bank of Scotland Group plc and changed its name to NatWest Group plc in July 2020. NatWest Group plc was founded in 1727 and is headquartered in Edinburgh, the United Kingdom.