Critical Comparison: Sandy Spring Bancorp (NASDAQ:SASR) versus Washington Federal (NASDAQ:WAFD)

Sandy Spring Bancorp (NASDAQ:SASR) and Washington Federal (NASDAQ:WAFD) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Volatility & Risk

Sandy Spring Bancorp has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, Washington Federal has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500.

Valuation and Earnings

This table compares Sandy Spring Bancorp and Washington Federal’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sandy Spring Bancorp $419.19 million 2.69 $116.43 million $3.28 7.30
Washington Federal $733.78 million 2.34 $210.26 million $2.61 8.68

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

Profitability

This table compares Sandy Spring Bancorp and Washington Federal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sandy Spring Bancorp 11.88% 6.35% 0.77%
Washington Federal 25.93% 8.46% 1.00%

Institutional and Insider Ownership

62.4% of Sandy Spring Bancorp shares are held by institutional investors. Comparatively, 82.5% of Washington Federal shares are held by institutional investors. 3.2% of Sandy Spring Bancorp shares are held by insiders. Comparatively, 1.2% of Washington Federal shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Sandy Spring Bancorp pays an annual dividend of $1.20 per share and has a dividend yield of 5.0%. Washington Federal pays an annual dividend of $0.88 per share and has a dividend yield of 3.9%. Sandy Spring Bancorp pays out 36.6% of its earnings in the form of a dividend. Washington Federal pays out 33.7% 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. Sandy Spring Bancorp has increased its dividend for 2 consecutive years and Washington Federal has increased its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Sandy Spring Bancorp and Washington Federal, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sandy Spring Bancorp 0 2 3 0 2.60
Washington Federal 0 2 0 0 2.00

Sandy Spring Bancorp presently has a consensus price target of $33.00, indicating a potential upside of 37.73%. Washington Federal has a consensus price target of $30.75, indicating a potential upside of 35.70%. Given Sandy Spring Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Sandy Spring Bancorp is more favorable than Washington Federal.

Summary

Sandy Spring Bancorp beats Washington Federal on 9 of the 16 factors compared between the two stocks.

Sandy Spring Bancorp Company Profile

Sandy Spring Bancorp, Inc. operates as the bank holding company for Sandy Spring Bank that provides commercial banking services to individuals and businesses in central Maryland, Northern Virginia, and Washington D.C. The company operates in three segments: Community Banking, Insurance, and Investment Management. The Community Banking segment provides financial products and services, including various loan and deposit products to individuals and businesses. This segment accepts deposits, such as demand, money market savings, regular savings, and time deposits. Its loan products include residential real estate loans; commercial real estate loans, commercial construction loans, and other commercial loans; and consumer loans comprising home equity loans and lines, installment loans, and personal lines of credit. The Insurance segment provides general insurance agency services and annuities. The Investment Management segment provides comprehensive investment management and financial planning to individuals, families, small businesses, and associations, including cash flow analysis, investment review, tax and retirement planning, insurance analysis, and estate planning. The company also provides mortgage banking, equipment leasing, personal trust, and wealth management services. As of December 31, 2018, it operated 55 community offices and 6 financial centers. Sandy Spring Bancorp, Inc. was founded in 1868 and is headquartered in Olney, Maryland.

Washington Federal Company Profile

Washington Federal, Inc. operates as the bank holding company for Washington Federal, National Association that provides lending, depository, insurance, and other banking services in the United States. The company accepts deposit products, including business and personal checking accounts, and term certificates of deposit, as well as money market accounts and passbook savings accounts. It also provides single-family residential, construction, land acquisition and development, land consumer lot, multi-family residential, commercial and industrial, commercial real estate, home equity, business, and consumer loans. In addition, the company offers insurance brokerage services, such as individual and business insurance policies to customers and general public; holds and markets real estate properties; and acts as trustee. It serves consumers, mid-sized and large businesses, and owners and developers of commercial real estate. As of September 30, 2018, the company had 235 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, and Texas. Washington Federal, Inc. was founded in 1917 and is headquartered in Seattle, Washington.

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