Critical Contrast: Capitol Federal Financial (NASDAQ:CFFN) vs. West Bancorporation (NASDAQ:WTBA)

Capitol Federal Financial (NASDAQ:CFFN) and West Bancorporation (NASDAQ:WTBA) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Profitability

This table compares Capitol Federal Financial and West Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Capitol Federal Financial	17.80%	7.46%	0.79%
West Bancorporation	17.30%	14.88%	0.95%

Dividends

Capitol Federal Financial pays an annual dividend of $0.34 per share and has a dividend yield of 4.2%. West Bancorporation pays an annual dividend of $1.00 per share and has a dividend yield of 4.0%. Capitol Federal Financial pays out 56.7% of its earnings in the form of a dividend. West Bancorporation pays out 48.5% 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.

Earnings and Valuation

This table compares Capitol Federal Financial and West Bancorporation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capitol Federal Financial	$420.24 million	2.47	$68.03 million	$0.60	13.65
West Bancorporation	$98.28 million	4.35	$32.56 million	$2.06	12.19

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

Risk & Volatility

Capitol Federal Financial has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, West Bancorporation has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500.

Insider and Institutional Ownership

88.5% of Capitol Federal Financial shares are held by institutional investors. Comparatively, 44.3% of West Bancorporation shares are held by institutional investors. 2.8% of Capitol Federal Financial shares are held by insiders. Comparatively, 4.6% of West Bancorporation 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.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Capitol Federal Financial and West Bancorporation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capitol Federal Financial	0	3	1	0	2.25
West Bancorporation	0	3	1	0	2.25

Capitol Federal Financial currently has a consensus price target of $8.00, indicating a potential downside of 2.32%. West Bancorporation has a consensus price target of $24.75, indicating a potential downside of 1.43%. Given West Bancorporation’s higher probable upside, analysts clearly believe West Bancorporation is more favorable than Capitol Federal Financial.

Summary

West Bancorporation beats Capitol Federal Financial on 8 of the 14 factors compared between the two stocks.

About Capitol Federal Financial

Capitol Federal Financial, Inc. operates as the holding company for Capitol Federal Savings Bank that provides various retail banking products and services in the United States. The company accepts a range of deposit products, including savings accounts, money market accounts, interest-bearing and non-interest-bearing checking accounts, and certificates of deposit. It also provides various loan products, such as one- to four-family residential real estate loans, commercial real estate, commercial and industrial, construction loans, and small business loans, as well as consumer loans, which include home equity loans and lines of credit, home improvement loans, vehicle loans, and loans secured by savings deposits. In addition, the company offers mobile, telephone, and online banking services, as well as bill payment services; credit cards; mortgage loan; operates a call center; and invests in various securities. The company serves the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia, and Salina, Kansas, and a portion of the metropolitan area of greater Kansas City. Capitol Federal Financial, Inc. was founded in 1893 and is headquartered in Topeka, Kansas.

About West Bancorporation

West Bancorporation, Inc. operates as the financial holding company provides community banking and trust services to individuals and small- to medium-sized businesses in the United States. It offers deposit services, including checking, savings, and money market accounts, as well as time certificates of deposit. The company also provides loan products comprising commercial real estate loans, construction and land development loans, commercial lines of credit, and commercial term loans; consumer loans, including loans extended to individuals for household, family, and other personal expenditures not secured by real estate; and 1-4 family residential mortgages and home equity loans. In addition, it offers online and mobile banking, treasury management services including cash management, client-generated automated clearing house transactions, remote deposit, and fraud protection services; merchant credit card processing and corporate credit cards; and administration of estates, conservatorships, personal trusts, and agency accounts. The company was founded in 1893 and is headquartered in West Des Moines, Iowa.