Analyzing Heritage Financial (NASDAQ:HFWA) and Landmark Bancorp (NASDAQ:LARK)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Financial	20.50%	8.71%	1.13%
Landmark Bancorp	19.67%	12.22%	1.19%

Earnings and Valuation

This table compares Heritage Financial and Landmark Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$335.97 million	3.33	$67.53 million	$2.04	13.30
Landmark Bancorp	$95.97 million	1.78	$18.77 million	$3.12	8.96

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

Insider and Institutional Ownership

78.3% of Heritage Financial shares are owned by institutional investors. Comparatively, 25.7% of Landmark Bancorp shares are owned by institutional investors. 1.5% of Heritage Financial shares are owned by insiders. Comparatively, 12.8% of Landmark Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.5%. Landmark Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 3.0%. Heritage Financial pays out 47.1% of its earnings in the form of a dividend. Landmark Bancorp pays out 26.9% 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. Heritage Financial has increased its dividend for 14 consecutive years and Landmark Bancorp has increased its dividend for 6 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	1	2	3	0	2.33
Landmark Bancorp	0	1	0	0	2.00

Heritage Financial currently has a consensus price target of $30.50, suggesting a potential upside of 12.38%. Given Heritage Financial’s stronger consensus rating and higher probable upside, research analysts plainly believe Heritage Financial is more favorable than Landmark Bancorp.

Volatility & Risk

Heritage Financial has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Landmark Bancorp has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Summary

Heritage Financial beats Landmark Bancorp on 12 of the 17 factors compared between the two stocks.

About Heritage Financial

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. It accepts various deposit products, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. The company’s 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, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. It also originates loans that are guaranteed by the U.S. Small Business Administration; and provides objective advice from trusted advisers. 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 1927 and is headquartered in Olympia, Washington.

About Landmark Bancorp

Landmark Bancorp, Inc. operates as the financial holding company for Landmark National Bank that provides various financial and banking services to its local communities. It offers non-interest bearing demand, money market, checking, and savings accounts, as well as certificates of deposit. The company also provides one-to-four family residential real estate, construction and land, commercial real estate, commercial, paycheck protection program, municipal, and agriculture loans; and consumer and other loans, such as automobile, boat, and home improvement and home equity loans, as well as insurance, and mobile and online banking services. In addition, the company invests in certain investment and mortgage-related securities. It operates in the eastern, central, southeast, and southwest Kansas. The company was founded in 1885 and is headquartered in Manhattan, Kansas.