Reviewing Westamerica Bancorporation (NASDAQ:WABC) & Sound Financial Bancorp (NASDAQ:SFBC)

Westamerica Bancorporation (NASDAQ:WABC) and Sound Financial Bancorp (NASDAQ:SFBC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Dividends

Westamerica Bancorporation pays an annual dividend of $1.84 per share and has a dividend yield of 3.8%. Sound Financial Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. Westamerica Bancorporation pays out 40.1% of its earnings in the form of a dividend. Sound Financial Bancorp pays out 28.8% 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. Westamerica Bancorporation has increased its dividend for 34 consecutive years and Sound Financial Bancorp has increased its dividend for 2 consecutive years. Westamerica Bancorporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Westamerica Bancorporation and Sound Financial Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westamerica Bancorporation	$264.32 million	4.66	$138.64 million	$4.59	10.55
Sound Financial Bancorp	$62.03 million	1.86	$4.64 million	$2.64	16.96

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

Institutional & Insider Ownership

81.9% of Westamerica Bancorporation shares are held by institutional investors. Comparatively, 68.9% of Sound Financial Bancorp shares are held by institutional investors. 5.3% of Westamerica Bancorporation shares are held by company insiders. Comparatively, 12.6% of Sound Financial Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Westamerica Bancorporation and Sound Financial Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westamerica Bancorporation	43.19%	13.10%	2.02%
Sound Financial Bancorp	10.97%	6.53%	0.66%

Analyst Ratings

This is a breakdown of recent recommendations for Westamerica Bancorporation and Sound Financial Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westamerica Bancorporation	0	3	0	0	2.00
Sound Financial Bancorp	0	1	0	0	2.00

Westamerica Bancorporation presently has a consensus target price of $52.00, suggesting a potential upside of 7.40%. Given Westamerica Bancorporation’s higher probable upside, equities research analysts plainly believe Westamerica Bancorporation is more favorable than Sound Financial Bancorp.

Volatility and Risk

Westamerica Bancorporation has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.16, suggesting that its stock price is 84% less volatile than the S&P 500.

Summary

Westamerica Bancorporation beats Sound Financial Bancorp on 12 of the 15 factors compared between the two stocks.

About Westamerica Bancorporation

Westamerica Bancorporation operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers. The company accepts various deposit products, including retail savings and checking accounts, as well as certificates of deposit. Its loan portfolio includes commercial, commercial and residential real estate, real estate construction, and consumer installment loans, as well as indirect automobile loans. The company was formerly known as Independent Bankshares Corporation and changed its name to Westamerica Bancorporation in 1983. The company was founded in 1884 and is headquartered in San Rafael, California.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.