First Financial Northwest (NASDAQ: FFNW) and Old Line Bancshares (NASDAQ:OLBK) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.

Institutional and Insider Ownership

44.8% of First Financial Northwest shares are owned by institutional investors. Comparatively, 41.5% of Old Line Bancshares shares are owned by institutional investors. 7.3% of First Financial Northwest shares are owned by insiders. Comparatively, 25.1% of Old Line Bancshares shares are owned by 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.

Profitability

This table compares First Financial Northwest and Old Line Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Financial Northwest 18.74% 6.44% 0.86%
Old Line Bancshares 21.68% 10.23% 0.91%

Volatility & Risk

First Financial Northwest has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Old Line Bancshares has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500.

Dividends

First Financial Northwest pays an annual dividend of $0.28 per share and has a dividend yield of 1.7%. Old Line Bancshares pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. First Financial Northwest pays out 32.2% of its earnings in the form of a dividend. Old Line Bancshares pays out 22.4% 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.

Analyst Recommendations

This is a summary of recent ratings and target prices for First Financial Northwest and Old Line Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Financial Northwest 0 0 0 0 N/A
Old Line Bancshares 0 1 1 0 2.50

Old Line Bancshares has a consensus target price of $31.00, suggesting a potential upside of 3.85%. Given Old Line Bancshares’ higher possible upside, analysts plainly believe Old Line Bancshares is more favorable than First Financial Northwest.

Valuation and Earnings

This table compares First Financial Northwest and Old Line Bancshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
First Financial Northwest $44.36 million 4.07 $8.89 million $0.87 19.29
Old Line Bancshares $68.72 million 5.41 $13.15 million $1.43 20.87

Old Line Bancshares has higher revenue and earnings than First Financial Northwest. First Financial Northwest is trading at a lower price-to-earnings ratio than Old Line Bancshares, indicating that it is currently the more affordable of the two stocks.

Summary

Old Line Bancshares beats First Financial Northwest on 12 of the 15 factors compared between the two stocks.

First Financial Northwest Company Profile

First Financial Northwest, Inc. (First Financial Northwest) is a holding company for First Financial Northwest Bank (the Bank). The Bank primarily serves the greater Puget Sound region of King and to a lesser extent, Pierce, Snohomish and Kitsap Counties, Washington through its full-service banking office located in Renton, Washington and branch office in Mill Creek, Washington. The Bank’s business consists of attracting deposits from the public and utilizing these funds to originate one- to four-family residential, multifamily, commercial real estate, construction/land development, business and consumer loans. It focuses on its lending activities primarily on loans secured by commercial real estate, construction/land development, first mortgages on one- to four-family residences, multifamily and business lending. Its investment portfolio consisted principally of mortgage-backed securities, municipal bonds, the United States Government Agency obligations and corporate bonds.

Old Line Bancshares Company Profile

Old Line Bancshares, Inc. is the holding company of Old Line Bank (The Bank). The Bank is a chartered trust company engaged in commercial banking business, making various types of loans, investments and accepting deposits. The Bank markets its financial services to small to medium sized businesses, entrepreneurs, professionals, consumers and clients. The Bank, through its division Old Line Financial Services, provides retirement planning and products, as well as investment services, including investment management, estate and succession planning, and allows its customers to directly purchase individual stocks, bonds and mutual funds. The Bank offers its customers safe deposit boxes, wire transfer services, debit cards, prepaid cards, automated teller machines at all of its branch locations, investment services and credit cards through a third party processor.

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