PCSB Bank (NASDAQ: PCSB) and Heritage Financial (NASDAQ:HFWA) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for PCSB Bank and Heritage Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PCSB Bank 0 0 1 0 3.00
Heritage Financial 0 0 5 0 3.00

PCSB Bank presently has a consensus target price of $24.00, suggesting a potential upside of 20.48%. Heritage Financial has a consensus target price of $35.00, suggesting a potential upside of 9.89%. Given PCSB Bank’s higher possible upside, analysts plainly believe PCSB Bank is more favorable than Heritage Financial.

Valuation and Earnings

This table compares PCSB Bank and Heritage Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PCSB Bank $45.04 million 8.04 $3.22 million N/A N/A
Heritage Financial $183.29 million 5.91 $41.79 million $1.48 21.52

Heritage Financial has higher revenue and earnings than PCSB Bank.

Dividends

PCSB Bank pays an annual dividend of $0.12 per share and has a dividend yield of 0.6%. Heritage Financial pays an annual dividend of $0.60 per share and has a dividend yield of 1.9%. Heritage Financial pays out 40.5% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
PCSB Bank 4.48% 2.55% 0.50%
Heritage Financial 20.10% 9.09% 1.16%

Institutional and Insider Ownership

43.6% of PCSB Bank shares are owned by institutional investors. Comparatively, 70.4% of Heritage Financial shares are owned by institutional investors. 1.6% of PCSB Bank shares are owned by company insiders. Comparatively, 1.8% of Heritage Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Heritage Financial beats PCSB Bank on 9 of the 13 factors compared between the two stocks.

PCSB Bank Company Profile

PCSB Financial Corporation operates as the bank holding company for PCSB Bank that provides financial services to individuals and businesses in Putnam, Southern Dutchess, Rockland, and Westchester Counties in New York. Its deposits products include non-interest bearing demand, NOW, money market, escrow, and savings accounts, as well as certificates of deposit. The company also offers commercial real estate, multi-family residential real estate, commercial business, construction, residential mortgage, consumer, and consumer and business installment loans, as well as home equity lines of credit. It provides its services from executive offices/headquarters and 15 banking offices. The company was founded in 1871 and is headquartered in Yorktown Heights, New York.

Heritage Financial Company Profile

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to businesses and individuals in the United States. The company accepts various deposit products, such as noninterest demand accounts, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its 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, business lines of credit, term equipment financing, and term real estate loans, as well as commercial loans focuses on real estate related industries and businesses in agricultural, healthcare, legal, and other professions. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services through trust powers, as well as objective advice. As of December 31, 2017, the company had a network of 59 branches located in Washington and Oregon. 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 1994 and is headquartered in Olympia, Washington.

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