Analyzing Heritage Financial (NASDAQ:HFWA) and SR Bancorp (NASDAQ:SRBK)

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

Institutional and Insider Ownership

78.3% of Heritage Financial shares are owned by institutional investors. Comparatively, 24.7% of SR Bancorp shares are owned by institutional investors. 1.8% of Heritage Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Financial	15.70%	8.18%	0.96%
SR Bancorp	N/A	-4.55%	-0.84%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Heritage Financial and SR Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	2	1	0	2.33
SR Bancorp	0	0	0	0	N/A

Heritage Financial currently has a consensus target price of $21.75, suggesting a potential upside of 1.30%. Given Heritage Financial’s higher possible upside, equities research analysts clearly believe Heritage Financial is more favorable than SR Bancorp.

Valuation & Earnings

This table compares Heritage Financial and SR Bancorp’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$303.13 million	2.46	$61.76 million	$1.33	16.14
SR Bancorp	$14.78 million	6.14	N/A	N/A	N/A

Heritage Financial has higher revenue and earnings than SR Bancorp.

Summary

Heritage Financial beats SR Bancorp on 8 of the 9 factors compared between the two stocks.

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.

About SR Bancorp

SR Bancorp, Inc. operates as the holding company for Somerset Regal Bank that provides customary retail and commercial banking services to individuals, businesses, and local municipalities in the communities of Somerset, Middlesex, Hunterdon, and Essex counties in New Jersey. It offers deposit instruments, including noninterest-bearing demand deposits, interest-bearing demand accounts, savings accounts, money market accounts, and certificates of deposit. The company also provides loans comprising one- to four family-residential mortgage loans, home equity loans and lines of credit, unsecured personal loans, and rehabilitation loans; and bill payment services. In addition, it is involved in the investment activities. The company was founded in 1887 and is headquartered in Bound Brook, New Jersey.