Analyzing Timberland Bancorp (NASDAQ:TSBK) and TFS Financial (NASDAQ:TFSL)

Timberland Bancorp (NASDAQ:TSBK) and TFS Financial (NASDAQ:TFSL) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Insider and Institutional Ownership

65.5% of Timberland Bancorp shares are held by institutional investors. Comparatively, 9.8% of TFS Financial shares are held by institutional investors. 3.6% of Timberland Bancorp shares are held by company insiders. Comparatively, 0.7% of TFS Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Timberland Bancorp has a beta of 0.32, suggesting that its stock price is 68% less volatile than the S&P 500. Comparatively, TFS Financial has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Timberland Bancorp	26.22%	11.67%	1.54%
TFS Financial	11.42%	4.89%	0.53%

Valuation & Earnings

This table compares Timberland Bancorp and TFS Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timberland Bancorp	$114.63 million	2.77	$29.16 million	$3.91	10.38
TFS Financial	$791.96 million	5.63	$90.96 million	$0.33	48.21

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Timberland Bancorp and TFS Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timberland Bancorp	0	0	1	0	3.00
TFS Financial	0	3	1	0	2.25

TFS Financial has a consensus price target of $15.50, indicating a potential downside of 2.58%. Given TFS Financial’s higher probable upside, analysts clearly believe TFS Financial is more favorable than Timberland Bancorp.

Dividends

Timberland Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 2.9%. TFS Financial pays an annual dividend of $1.13 per share and has a dividend yield of 7.1%. Timberland Bancorp pays out 29.7% of its earnings in the form of a dividend. TFS Financial pays out 342.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Timberland Bancorp has increased its dividend for 13 consecutive years.

Summary

Timberland Bancorp beats TFS Financial on 9 of the 16 factors compared between the two stocks.

About Timberland Bancorp

Timberland Bancorp, Inc. operates as the bank holding company for Timberland Bank that provides various community banking services in Washington. It offers various deposit products, including money market deposit, checking, and regular savings accounts, as well as certificates of deposit. The company also provides one-to four-family residential, multi-family, and commercial real estate loans; and construction lending products, such as custom and owner/builder, speculative one- to four-family, commercial, multi-family, land development, and land development. In addition, it offers consumer loans comprising home equity lines of credit and second mortgage loans, automobile loans, boat loans, motorcycle loans, recreational vehicle loans, savings account loans, and unsecured loans; and commercial business loans. Timberland Bancorp, Inc. was founded in 1915 and is headquartered in Hoquiam, Washington.

About TFS Financial

TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.