Comparing Heritage Financial (NASDAQ:HFWA) and Flushing Financial (NASDAQ:FFIC)

Flushing Financial (NASDAQ:FFIC) and Heritage Financial (NASDAQ:HFWA) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Profitability

This table compares Flushing Financial and Heritage Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Flushing Financial	3.86%	5.96%	0.47%
Heritage Financial	20.10%	8.61%	1.10%

Dividends

Flushing Financial pays an annual dividend of $0.88 per share and has a dividend yield of 5.4%. Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.5%. Flushing Financial pays out 163.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Heritage Financial pays out 49.0% of its earnings in the form of a dividend. Heritage Financial has increased its dividend for 14 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Flushing Financial and Heritage Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flushing Financial	1	3	0	0	1.75
Heritage Financial	0	4	2	0	2.33

Flushing Financial presently has a consensus target price of $16.80, indicating a potential upside of 2.38%. Heritage Financial has a consensus target price of $31.25, indicating a potential upside of 12.69%. Given Heritage Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Heritage Financial is more favorable than Flushing Financial.

Valuation and Earnings

This table compares Flushing Financial and Heritage Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flushing Financial	$489.63 million	1.13	$18.88 million	$0.54	30.39
Heritage Financial	$335.97 million	2.80	$67.53 million	$1.96	14.15

Heritage Financial has lower revenue, but higher earnings than Flushing Financial. Heritage Financial is trading at a lower price-to-earnings ratio than Flushing Financial, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

67.1% of Flushing Financial shares are held by institutional investors. Comparatively, 78.3% of Heritage Financial shares are held by institutional investors. 5.7% of Flushing Financial shares are held by insiders. Comparatively, 1.8% of Heritage Financial shares are held by 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.

Risk and Volatility

Flushing Financial has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Summary

Heritage Financial beats Flushing Financial on 12 of the 17 factors compared between the two stocks.

About Flushing Financial

Flushing Financial Corporation operates as the bank holding company for Flushing Bank that provides banking products and services primarily to consumers, businesses, and governmental units. It offers various deposit products, including checking and savings accounts, money market accounts, non-interest bearing demand accounts, NOW accounts, and certificates of deposit. The company also provides mortgage loans secured by multi-family residential, commercial real estate, one-to-four family mixed-use property, one-to-four family residential property, and commercial business loans; construction loans; small business administration loans and other small business loans; mortgage loan surrogates, such as mortgage-backed securities; and consumer loans, including overdraft lines of credit, as well as the United States government securities, corporate fixed-income securities, and other marketable securities. It operates full-service banking offices in Queens, Nassau, Suffolk, Kings, and New York counties, New York; and an internet branch under the iGObanking and BankPurely brands. Flushing Financial Corporation was founded in 1929 and is based in Uniondale, New York.

About Heritage Financial

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. It accepts various deposit products, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. The company’s loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. It also originates loans that are guaranteed by the U.S. Small Business Administration; and provides objective advice from trusted advisers. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1927 and is headquartered in Olympia, Washington.