Critical Contrast: Sound Financial Bancorp (NASDAQ:SFBC) and NatWest Group (NYSE:NWG)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	12.89%	7.31%	0.74%
NatWest Group	20.10%	14.01%	0.82%

Volatility & Risk

Sound Financial Bancorp has a beta of 0.01, meaning that its share price is 99% less volatile than the S&P 500. Comparatively, NatWest Group has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. NatWest Group pays an annual dividend of $0.63 per share and has a dividend yield of 3.3%. Sound Financial Bancorp pays out 26.9% 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. Sound Financial Bancorp has raised its dividend for 2 consecutive years.

Institutional & Insider Ownership

68.8% of Sound Financial Bancorp shares are held by institutional investors. Comparatively, 1.3% of NatWest Group shares are held by institutional investors. 12.3% of Sound Financial Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Sound Financial Bancorp and NatWest Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	2.03	$7.16 million	$3.12	15.54
NatWest Group	$38.91 billion	1.94	$7.69 billion	$2.01	9.45

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

Analyst Recommendations

This is a summary of recent recommendations for Sound Financial Bancorp and NatWest Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	0	1	0	3.00
NatWest Group	0	3	4	1	2.75

Summary

NatWest Group beats Sound Financial Bancorp on 9 of the 17 factors compared between the two stocks.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.

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.