Comparing Kearny Financial (NASDAQ:KRNY) and Sturgis Bancorp (OTCMKTS:STBI)

Sturgis Bancorp (OTCMKTS:STBI) and Kearny Financial (NASDAQ:KRNY) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Risk and Volatility

Sturgis Bancorp has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500. Comparatively, Kearny Financial has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sturgis Bancorp	12.73%	N/A	N/A
Kearny Financial	8.57%	3.90%	0.38%

Dividends

Sturgis Bancorp pays an annual dividend of $0.68 per share and has a dividend yield of 3.4%. Kearny Financial pays an annual dividend of $0.44 per share and has a dividend yield of 6.9%. Sturgis Bancorp pays out 19.8% of its earnings in the form of a dividend. Kearny Financial pays out 93.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

71.0% of Kearny Financial shares are owned by institutional investors. 16.0% of Sturgis Bancorp shares are owned by company insiders. Comparatively, 7.4% of Kearny Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Sturgis Bancorp and Kearny Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sturgis Bancorp	0	0	0	0	0.00
Kearny Financial	0	2	1	0	2.33

Kearny Financial has a consensus price target of $7.75, suggesting a potential upside of 21.28%. Given Kearny Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Kearny Financial is more favorable than Sturgis Bancorp.

Earnings and Valuation

This table compares Sturgis Bancorp and Kearny Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sturgis Bancorp	$56.82 million	0.77	$2.84 million	$3.43	5.89
Kearny Financial	$160.47 million	2.58	$26.08 million	$0.47	13.60

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

Summary

Kearny Financial beats Sturgis Bancorp on 12 of the 16 factors compared between the two stocks.

About Sturgis Bancorp

Sturgis Bancorp, Inc. operates as the bank holding company for Sturgis Bank & Trust Company that provides banking products and services in Michigan, the United States. The company offers checking, savings and health savings, and money market accounts; and certificates of deposit and individual retirement accounts. It also provides mortgage, automobile, savings secured, personal, home equity, equipment and machinery, government supported, and commercial real estate loans, as well as home equity lines of credit and business lines of credit; and credit cards. In addition, the company offers private banking, cashier checks, wire transfers, foreign drafts and foreign currency, overdraft protection, night depository, and notary services, as well as safe deposit boxes and residential mortgages. Further, it provides direct deposit, remote deposit capture, Visa check card, and checks reorder services; and investment and financial-advisory services, as well as commercial and consumer insurance and title insurance products. Additionally, the company offers estate and asset management services, such as estate settlements, trust administration, record keeping, investment management, and custody services; cash and treasury management; and online and mobile banking, bill pay, and mobile wallet services. It operates through 14 bank facilities and 4 full service standalone ATMs located in 12 communities in Michigan. Sturgis Bancorp, Inc. was founded in 1905 and is headquartered in Sturgis, Michigan.

About Kearny Financial

Kearny Financial Corp. operates as the holding company for Kearny Bank that provides various banking products and services in the United States. It offers various deposit products, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, savings accounts, and certificates of deposit accounts. The company also provides various loans, such as multi-family and nonresidential real estate mortgage loans, commercial term loans and lines of credit, one- to four-family residential mortgage loans, and home equity loans and lines of credit; loans to individuals, builders, or developers for the construction of multi-family residential buildings or commercial real estate, or for the construction or renovation of one- to four-family residences; overdraft lines of credit; and personal loans. In addition, it engages in the investment activities. Kearny Financial Corp. was founded in 1884 and is headquartered in Fairfield, New Jersey.