Financial Review: Beneficial Bancorp (BNCL) & Heritage Financial (HFWA)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Beneficial Bancorp 10.56% 3.58% 0.64%
Heritage Financial 21.16% 8.86% 1.11%

Dividends

Beneficial Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.6%. Heritage Financial pays an annual dividend of $0.60 per share and has a dividend yield of 2.0%. Heritage Financial pays out 40.5% of its earnings in the form of a dividend.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Beneficial Bancorp 0 1 0 0 2.00
Heritage Financial 0 1 4 0 2.80

Beneficial Bancorp presently has a consensus price target of $17.00, suggesting a potential upside of 10.03%. Heritage Financial has a consensus price target of $34.50, suggesting a potential upside of 15.19%. Given Heritage Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Heritage Financial is more favorable than Beneficial Bancorp.

Insider & Institutional Ownership

72.3% of Beneficial Bancorp shares are owned by institutional investors. Comparatively, 70.9% of Heritage Financial shares are owned by institutional investors. 5.5% of Beneficial Bancorp shares are owned by insiders. Comparatively, 2.7% of Heritage Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Beneficial Bancorp has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Valuation & Earnings

This table compares Beneficial Bancorp and Heritage Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Beneficial Bancorp $226.63 million 5.15 $23.93 million N/A N/A
Heritage Financial $183.29 million 5.56 $41.79 million $1.48 20.24

Heritage Financial has lower revenue, but higher earnings than Beneficial Bancorp.

Summary

Heritage Financial beats Beneficial Bancorp on 9 of the 15 factors compared between the two stocks.

Beneficial Bancorp Company Profile

Beneficial Bancorp, Inc., together with its subsidiaries, provides consumer and commercial banking services to individuals, businesses, and nonprofit organizations in Philadelphia and Southern New Jersey area. The company accepts various deposit products, including non-interest bearing demand deposits, such as individual checking accounts; interest-bearing demand accounts comprising NOW, municipal, and money market accounts; savings accounts; certificates of deposit; and commercial checking accounts, as well as checking accounts primarily for small businesses. It also provides cash management services that include remote deposit, lockbox service, and sweep accounts; and certificate of deposit account registry service and brokered certificates of deposit. In addition, the company offers a portfolio of commercial loans and leases, which comprises business loans, small business leases, commercial real estate loans, and commercial construction loans; residential loans, including one- to four-family residential real estate loans; and consumer personal loans, such as home equity loans and lines of credit, automobile loans, personal loans, recreational vehicles, and educational loans. Further, it provides insurance brokerage and wealth management services; and property, casualty, life, and health and benefits insurance services. Additionally, the company holds title to various securities and other investments; holds and manages other real estate owned properties. The company was founded in 1853 and is headquartered in Philadelphia, Pennsylvania.

Heritage Financial Company Profile

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to businesses and individuals in the United States. The company accepts various deposit products, such as noninterest demand accounts, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its 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, business lines of credit, term equipment financing, and term real estate loans, as well as commercial loans focuses on real estate related industries and businesses in agricultural, healthcare, legal, and other professions. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services through trust powers, as well as objective advice. As of December 31, 2017, the company had a network of 59 branches located in Washington and Oregon. 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 1994 and is headquartered in Olympia, Washington.

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