Contrasting Timberland Bancorp (NASDAQ:TSBK) and Pathward Financial (NASDAQ:CASH)

Timberland Bancorp (NASDAQ:TSBK) and Pathward Financial (NASDAQ:CASH) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Institutional and Insider Ownership

65.5% of Timberland Bancorp shares are held by institutional investors. Comparatively, 92.7% of Pathward Financial shares are held by institutional investors. 3.6% of Timberland Bancorp shares are held by company insiders. Comparatively, 1.4% of Pathward Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Timberland Bancorp pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Timberland Bancorp pays out 30.1% of its earnings in the form of a dividend. Pathward Financial pays out 2.5% 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. Timberland Bancorp has raised its dividend for 13 consecutive years. Timberland Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Timberland Bancorp and Pathward Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timberland Bancorp	$114.63 million	3.09	$29.16 million	$3.99	11.42
Pathward Financial	$851.49 million	1.85	$185.87 million	$7.98	9.51

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Timberland Bancorp and Pathward Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timberland Bancorp	0	0	0	1	4.00
Pathward Financial	0	0	3	0	3.00

Pathward Financial has a consensus target price of $101.00, suggesting a potential upside of 33.07%. Given Pathward Financial’s higher probable upside, analysts plainly believe Pathward Financial is more favorable than Timberland Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Timberland Bancorp	26.46%	11.72%	1.55%
Pathward Financial	21.03%	20.61%	2.41%

Volatility and Risk

Timberland Bancorp has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500. Comparatively, Pathward Financial has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Summary

Pathward Financial beats Timberland Bancorp on 10 of the 18 factors compared between the two stocks.

About Timberland Bancorp

Timberland Bancorp, Inc. operates as the bank holding company for Timberland Bank that provides various community banking services in Washington. It offers various deposit products, including money market deposit, checking, and regular savings accounts, as well as certificates of deposit. The company also provides one-to four-family residential, multi-family, and commercial real estate loans; and construction lending products, such as custom and owner/builder, speculative one- to four-family, commercial, multi-family, land development, and land development. In addition, it offers consumer loans comprising home equity lines of credit and second mortgage loans, automobile loans, boat loans, motorcycle loans, recreational vehicle loans, savings account loans, and unsecured loans; and commercial business loans. Timberland Bancorp, Inc. was founded in 1915 and is headquartered in Hoquiam, Washington.

About Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.