Sound Financial Bancorp (NASDAQ:SFBC) vs. First Hawaiian (NASDAQ:FHB) Critical Survey

First Hawaiian (NASDAQ:FHB) and Sound Financial Bancorp (NASDAQ:SFBC) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Hawaiian	23.65%	10.19%	1.16%
Sound Financial Bancorp	11.64%	6.76%	0.67%

Risk & Volatility

First Hawaiian has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.11, indicating that its stock price is 89% less volatile than the S&P 500.

Dividends

First Hawaiian pays an annual dividend of $1.04 per share and has a dividend yield of 4.0%. Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. First Hawaiian pays out 47.3% of its earnings in the form of a dividend. Sound Financial Bancorp pays out 30.3% 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 raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations for First Hawaiian and Sound Financial Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Hawaiian	3	6	0	0	1.67
Sound Financial Bancorp	0	1	0	0	2.00

First Hawaiian presently has a consensus target price of $27.50, indicating a potential upside of 5.36%. Given First Hawaiian’s higher probable upside, analysts clearly believe First Hawaiian is more favorable than Sound Financial Bancorp.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Hawaiian	$1.17 billion	2.76	$276.27 million	$2.20	11.86
Sound Financial Bancorp	$61.52 million	1.83	$7.16 million	$2.77	15.78

First Hawaiian has higher revenue and earnings than Sound Financial Bancorp. First Hawaiian 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

97.6% of First Hawaiian shares are owned by institutional investors. Comparatively, 68.9% of Sound Financial Bancorp shares are owned by institutional investors. 0.6% of First Hawaiian shares are owned by company insiders. Comparatively, 12.4% of Sound Financial Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

First Hawaiian beats Sound Financial Bancorp on 10 of the 16 factors compared between the two stocks.

About First Hawaiian

First Hawaiian, Inc. operates as a bank holding company for First Hawaiian Bank that provides a range of banking products and services to consumer and commercial customers in the United States. It operates in three segments: Retail Banking, Commercial Banking, and Treasury and Other. The company offers various deposit products, including checking, savings, and time deposit accounts, and other deposit accounts. It also provides residential and commercial mortgage loans, home equity lines of credit and loans, automobile loans and leases, secured and unsecured lines of credit, installment loans, small business loans and leases, and construction lending, as well as commercial lease and auto dealer financing. In addition, the company offers wealth management, personal installment, individual investment and financial planning, insurance protection, trust and estate, private banking, investment management, retirement planning, and merchant processing services, as well as consumer and commercial credit cards. The company was formerly known as BancWest Corporation and changed its name to First Hawaiian, Inc. in April 2016. First Hawaiian, Inc. was founded in 1858 and is headquartered in Honolulu, Hawaii.

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.