Franklin Financial Services (NASDAQ:FRAF) vs. Washington Trust Bancorp (NASDAQ:WASH) Financial Survey

Franklin Financial Services (NASDAQ:FRAF) and Washington Trust Bancorp (NASDAQ:WASH) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Institutional and Insider Ownership

24.8% of Franklin Financial Services shares are held by institutional investors. Comparatively, 65.8% of Washington Trust Bancorp shares are held by institutional investors. 5.9% of Franklin Financial Services shares are held by company insiders. Comparatively, 1.3% of Washington Trust Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Franklin Financial Services and Washington Trust Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Financial Services	17.73%	14.13%	1.05%
Washington Trust Bancorp	13.71%	9.79%	0.79%

Dividends

Franklin Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.3%. Washington Trust Bancorp pays an annual dividend of $2.24 per share and has a dividend yield of 6.7%. Franklin Financial Services pays out 25.5% of its earnings in the form of a dividend. Washington Trust Bancorp pays out 82.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Financial Services has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Franklin Financial Services and Washington Trust Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Financial Services	0	0	2	0	3.00
Washington Trust Bancorp	1	2	1	0	2.00

Franklin Financial Services currently has a consensus target price of $64.00, indicating a potential upside of 8.99%. Washington Trust Bancorp has a consensus target price of $33.00, indicating a potential downside of 1.20%. Given Franklin Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Franklin Financial Services is more favorable than Washington Trust Bancorp.

Valuation & Earnings

This table compares Franklin Financial Services and Washington Trust Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Financial Services	$133.55 million	1.97	$21.23 million	$5.34	11.00
Washington Trust Bancorp	$393.95 million	1.62	$52.24 million	$2.73	12.23

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

Summary

Franklin Financial Services beats Washington Trust Bancorp on 11 of the 16 factors compared between the two stocks.

About Franklin Financial Services

Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.

About Washington Trust Bancorp

Washington Trust Bancorp, Inc. operates as the bank holding company for The Washington Trust Company, of Westerly that provides various banking and financial services to individuals and businesses. The company operates in two segments, Commercial Banking and Wealth Management Services. The Commercial Banking segment offers deposit accounts, including interest-bearing and noninterest-bearing demand deposits, NOW and savings accounts, money market and retirement deposit accounts, and time deposits; various commercial and retail lending products, such as commercial real estate loans, including commercial mortgages, and construction and development loans; commercial and industrial loans comprising working capital, equipment financing, and financing for other business-related purposes; residential real estate loans that consist of mortgage and homeowner construction loans; and consumer loans comprising home equity loans and lines of credit, personal installment loans, and loans to individuals secured by general aviation aircraft. This segment also provides debit cards; automated teller machines (ATMs); telephone banking, internet banking, mobile banking, remote deposit capture, and other cash management services; and investment portfolio and wholesale funding services. The Wealth Management Services segment offers investment management; financial planning; personal trust and estate services, such as trustee, personal representative, custodian, and guardian; and settlement of decedents’ estates, as well as institutional trust services comprising custody and fiduciary services for personal and institutional clients. Washington Trust Bancorp, Inc. was founded in 1800 and is headquartered in Westerly, Rhode Island.