Home Financial Bancorp (OTCMKTS:HWEN) and Heritage Financial (NASDAQ:HFWA) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.

Valuation & Earnings

This table compares Home Financial Bancorp and Heritage Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Home Financial Bancorp N/A N/A $160,000.00 N/A N/A
Heritage Financial $183.29 million 6.16 $41.79 million $1.48 20.70

Heritage Financial has higher revenue and earnings than Home Financial Bancorp.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Home Financial Bancorp and Heritage Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Home Financial Bancorp 0 0 0 0 N/A
Heritage Financial 0 1 2 0 2.67

Heritage Financial has a consensus target price of $35.50, suggesting a potential upside of 15.86%. Given Heritage Financial’s higher probable upside, analysts plainly believe Heritage Financial is more favorable than Home Financial Bancorp.

Profitability

This table compares Home Financial Bancorp and Heritage Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Home Financial Bancorp N/A N/A N/A
Heritage Financial 20.10% 8.92% 1.20%

Institutional & Insider Ownership

84.0% of Heritage Financial shares are held by institutional investors. 93.4% of Home Financial Bancorp shares are held by insiders. Comparatively, 1.8% of Heritage Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Home Financial Bancorp has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.

Dividends

Home Financial Bancorp pays an annual dividend of $0.16 per share and has a dividend yield of 2.1%. Heritage Financial pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. Heritage Financial pays out 45.9% of its earnings in the form of a dividend. Heritage Financial has increased its dividend for 8 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Heritage Financial beats Home Financial Bancorp on 11 of the 14 factors compared between the two stocks.

Home Financial Bancorp Company Profile

Home Financial Bancorp operates as a holding company for Our Community Bank that offers various banking products and services in the United States. The company offers various deposits products, including demand deposits, savings accounts, NOW accounts, and money market deposits; commercial and industrial loans, nonresidential real estate loans, and residential, mobile home and land, and consumer loans. It also provides auto and hazard insurance; and Internet banking services. The company provides banking services primarily in Owen, Putnam, and other counties. Home Financial Bancorp was founded in 1911 and is based in Spencer, Indiana.

Heritage Financial Company Profile

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to businesses and individuals in the United States. The company accepts various deposit products, such as noninterest demand accounts, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, business lines of credit, term equipment financing, and term real estate loans, as well as commercial loans focuses on real estate related industries and businesses in agricultural, healthcare, legal, and other professions. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services through trust powers, as well as objective advice. As of December 31, 2017, the company had a network of 59 branches located in Washington and Oregon. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1994 and is headquartered in Olympia, Washington.

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