TFS Financial (NASDAQ: TFSL) and Baylake (NASDAQ:BYLK) are both financials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for TFS Financial and Baylake, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TFS Financial 0 1 0 0 2.00
Baylake 0 0 0 0 N/A

TFS Financial presently has a consensus price target of $18.50, suggesting a potential upside of 25.68%. Given TFS Financial’s higher possible upside, research analysts clearly believe TFS Financial is more favorable than Baylake.

Dividends

TFS Financial pays an annual dividend of $0.68 per share and has a dividend yield of 4.6%. Baylake pays an annual dividend of $0.36 per share and has a dividend yield of 2.1%. TFS Financial pays out 212.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Baylake pays out 42.4% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares TFS Financial and Baylake’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TFS Financial $428.84 million 9.64 $88.87 million $0.32 46.00
Baylake N/A N/A N/A $0.85 20.51

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

Profitability

This table compares TFS Financial and Baylake’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TFS Financial 20.32% 5.56% 0.69%
Baylake 10.34% 4.05% 0.43%

Volatility and Risk

TFS Financial has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, Baylake has a beta of 3.79, suggesting that its stock price is 279% more volatile than the S&P 500.

Institutional and Insider Ownership

11.0% of TFS Financial shares are held by institutional investors. 1.6% of TFS Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

TFS Financial beats Baylake on 9 of the 12 factors compared between the two stocks.

About TFS Financial

TFS Financial Corporation is the holding company of Third Federal Savings and Loan Association of Cleveland (Association). The Association is a savings and loan association. The Association’s principal business consists of originating and servicing residential real estate mortgage loans and attracting retail savings deposits. The principal line of business of the Company is retail consumer banking, including mortgage lending, deposit gathering and other financial services. Its principal lending activity is the origination of fixed-rate and adjustable-rate, first mortgage loans to purchase or refinance residential real estate in its markets in Ohio, Florida and selected counties in Kentucky. It originates residential construction loans to individuals and originates home equity loans and lines of credit in Ohio and Florida. It offers various loans, including residential real estate mortgage loans, home equity loans and home equity lines of credit and construction loans.

About Baylake

Baylake Corp. is a bank holding company. The Company’s primary activities consists of holding the stock of its subsidiary bank, Baylake Bank (the Bank), and providing a range of banking and related business activities through the Bank and its other subsidiaries. The Bank is an independent community bank offering a range of financial services primarily to small businesses and individuals located in its market area. The Bank provides a range of loan, deposit and other banking products and services to its business, individual or retail and municipal customers, which include safe deposit box services, personal and corporate trust services, treasury management, private banking, financial planning and electronic banking services, including mobile banking and eBanc, an Internet banking product for its customers. It offers investment advisory services through Admiral Asset Management, Inc. (Admiral). The Bank conducts its community banking business through over 20 service financial centers.

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