Analyzing Landmark Bancorp (NASDAQ:LARK) and Heritage Financial (NASDAQ:HFWA)

Landmark Bancorp (NASDAQ:LARK) 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 institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Landmark Bancorp	$95.97 million	1.72	$18.77 million	$3.12	8.69
Heritage Financial	$335.97 million	3.19	$67.53 million	$2.04	12.76

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

Insider and Institutional Ownership

25.7% of Landmark Bancorp shares are owned by institutional investors. Comparatively, 78.3% of Heritage Financial shares are owned by institutional investors. 12.8% of Landmark Bancorp shares are owned by company insiders. Comparatively, 1.5% of Heritage Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Landmark Bancorp and Heritage Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Landmark Bancorp	0	1	0	0	2.00
Heritage Financial	1	2	3	0	2.33

Heritage Financial has a consensus price target of $30.50, suggesting a potential upside of 17.17%. Given Heritage Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Heritage Financial is more favorable than Landmark Bancorp.

Dividends

Landmark Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 3.1%. Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.7%. Landmark Bancorp pays out 26.9% of its earnings in the form of a dividend. Heritage Financial pays out 47.1% 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. Landmark Bancorp has increased its dividend for 6 consecutive years and Heritage Financial has increased its dividend for 14 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Landmark Bancorp	19.67%	12.22%	1.19%
Heritage Financial	20.50%	8.71%	1.13%

Risk and Volatility

Landmark Bancorp has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.

Summary

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

About Landmark Bancorp

Landmark Bancorp, Inc. operates as the financial holding company for Landmark National Bank that provides various financial and banking services to its local communities. It offers non-interest bearing demand, money market, checking, and savings accounts, as well as certificates of deposit. The company also provides one-to-four family residential real estate, construction and land, commercial real estate, commercial, paycheck protection program, municipal, and agriculture loans; and consumer and other loans, such as automobile, boat, and home improvement and home equity loans, as well as insurance, and mobile and online banking services. In addition, the company invests in certain investment and mortgage-related securities. It operates in the eastern, central, southeast, and southwest Kansas. The company was founded in 1885 and is headquartered in Manhattan, Kansas.

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.