Financial Analysis: Franklin Financial Services (NASDAQ:FRAF) and BM Technologies (NYSE:BMTX)

Franklin Financial Services (NASDAQ:FRAF) and BM Technologies (NYSE:BMTX) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Institutional & Insider Ownership

24.8% of Franklin Financial Services shares are owned by institutional investors. Comparatively, 20.2% of BM Technologies shares are owned by institutional investors. 6.9% of Franklin Financial Services shares are owned by company insiders. Comparatively, 8.3% of BM Technologies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Franklin Financial Services and BM Technologies’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Financial Services	$68.90 million	1.82	$13.60 million	$3.12	9.13
BM Technologies	$55.25 million	0.46	-$17.33 million	($1.01)	-2.09

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

Risk and Volatility

Franklin Financial Services has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, BM Technologies has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500.

Profitability

This table compares Franklin Financial Services and BM Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Financial Services	13.69%	10.91%	0.74%
BM Technologies	-19.78%	-33.46%	-20.80%

Analyst Recommendations

This is a summary of current ratings and target prices for Franklin Financial Services and BM Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Financial Services	0	0	0	0	N/A
BM Technologies	0	1	2	0	2.67

BM Technologies has a consensus target price of $6.75, suggesting a potential upside of 219.91%. Given BM Technologies’ higher probable upside, analysts clearly believe BM Technologies is more favorable than Franklin Financial Services.

Summary

Franklin Financial Services beats BM Technologies on 10 of the 13 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 BM Technologies

BM Technologies, Inc., a financial technology company, facilitates deposits and banking services between a customer and its partner banks in the United States. It offers digital banking and disbursement services to consumers and students through a full service fintech banking platform. The company was formerly known as BankMobile Technologies, Inc. and changed its name to BM Technologies, Inc. in January 2021. BM Technologies, Inc. was founded in 2015 and is headquartered in Wayne, Pennsylvania.