Lake Shore Bancorp (NASDAQ:LSBK) versus TFS Financial (NASDAQ:TFSL) Critical Comparison

Lake Shore Bancorp (NASDAQ:LSBK) and TFS Financial (NASDAQ:TFSL) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Lake Shore Bancorp and TFS Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lake Shore Bancorp	0	1	0	0	2.00
TFS Financial	0	2	1	0	2.33

TFS Financial has a consensus target price of $15.00, suggesting a potential upside of 0.07%. Given TFS Financial’s stronger consensus rating and higher possible upside, analysts plainly believe TFS Financial is more favorable than Lake Shore Bancorp.

Risk and Volatility

Lake Shore Bancorp has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500. Comparatively, TFS Financial has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Dividends

Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.3%. TFS Financial pays an annual dividend of $1.13 per share and has a dividend yield of 7.5%. Lake Shore Bancorp pays out 34.0% of its earnings in the form of a dividend. TFS Financial pays out 353.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional & Insider Ownership

8.8% of Lake Shore Bancorp shares are owned by institutional investors. Comparatively, 9.8% of TFS Financial shares are owned by institutional investors. 4.1% of Lake Shore Bancorp shares are owned by company insiders. Comparatively, 0.7% of TFS Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Lake Shore Bancorp and TFS Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lake Shore Bancorp	18.38%	6.26%	1.00%
TFS Financial	11.29%	4.79%	0.52%

Earnings and Valuation

This table compares Lake Shore Bancorp and TFS Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lake Shore Bancorp	$27.84 million	4.48	$7.27 million	$1.06	14.95
TFS Financial	$791.96 million	5.31	$90.96 million	$0.32	46.84

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

Summary

TFS Financial beats Lake Shore Bancorp on 10 of the 16 factors compared between the two stocks.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.

About TFS Financial

TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.