Comparing Sound Financial Bancorp (NASDAQ:SFBC) & S&T Bancorp (NASDAQ:STBA)

Sound Financial Bancorp (NASDAQ:SFBC) and S&T Bancorp (NASDAQ:STBA) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Insider & Institutional Ownership

68.8% of Sound Financial Bancorp shares are owned by institutional investors. Comparatively, 65.2% of S&T Bancorp shares are owned by institutional investors. 12.3% of Sound Financial Bancorp shares are owned by company insiders. Comparatively, 1.2% of S&T Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Sound Financial Bancorp and S&T Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	1.80	$7.16 million	$3.12	13.80
S&T Bancorp	$415.61 million	4.14	$134.23 million	$3.76	12.98

S&T Bancorp has higher revenue and earnings than Sound Financial Bancorp. S&T Bancorp 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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Sound Financial Bancorp and S&T Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	0	1	0	3.00
S&T Bancorp	0	6	2	0	2.25

S&T Bancorp has a consensus target price of $51.60, suggesting a potential upside of 5.72%. Given S&T Bancorp’s higher possible upside, analysts plainly believe S&T Bancorp is more favorable than Sound Financial Bancorp.

Risk & Volatility

Sound Financial Bancorp has a beta of 0.03, indicating that its share price is 97% less volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. S&T Bancorp pays an annual dividend of $1.48 per share and has a dividend yield of 3.0%. Sound Financial Bancorp pays out 26.9% of its earnings in the form of a dividend. S&T Bancorp pays out 39.4% 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. Sound Financial Bancorp has increased its dividend for 2 consecutive years and S&T Bancorp has increased its dividend for 13 consecutive years. S&T Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Sound Financial Bancorp and S&T Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	12.89%	7.31%	0.74%
S&T Bancorp	24.51%	9.74%	1.42%

Summary

S&T Bancorp beats Sound Financial Bancorp on 12 of the 17 factors compared between the two stocks.

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.

About S&T Bancorp

S&T Bancorp, Inc. is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. The company was founded on March 17, 1983 and is headquartered in Indiana, PA.