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

Volatility and Risk

Heritage Financial Corporation has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500. Comparatively, Southern First Bancshares has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Valuation & Earnings

This table compares Heritage Financial Corporation and Southern First Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Heritage Financial Corporation $165.38 million 4.89 $41.69 million $1.40 19.39
Southern First Bancshares $53.79 million 4.73 $14.26 million $1.95 17.82

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

Profitability

This table compares Heritage Financial Corporation and Southern First Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Heritage Financial Corporation 23.81% 8.56% 1.08%
Southern First Bancshares 20.68% 11.39% 0.95%

Dividends

Heritage Financial Corporation pays an annual dividend of $0.52 per share and has a dividend yield of 1.9%. Southern First Bancshares does not pay a dividend. Heritage Financial Corporation pays out 37.1% of its earnings in the form of a dividend.

Insider and Institutional Ownership

75.9% of Heritage Financial Corporation shares are held by institutional investors. Comparatively, 70.2% of Southern First Bancshares shares are held by institutional investors. 2.7% of Heritage Financial Corporation shares are held by insiders. Comparatively, 14.5% of Southern First Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Heritage Financial Corporation and Southern First Bancshares, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heritage Financial Corporation 0 2 0 0 2.00
Southern First Bancshares 0 1 1 0 2.50

Heritage Financial Corporation presently has a consensus target price of $28.00, indicating a potential upside of 3.13%. Southern First Bancshares has a consensus target price of $37.00, indicating a potential upside of 6.47%. Given Southern First Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe Southern First Bancshares is more favorable than Heritage Financial Corporation.

Heritage Financial Corporation Company Profile

Heritage Financial Corporation is a bank holding company. The Company is engaged in the business of planning, directing and coordinating the business activities of its bank subsidiary, Heritage Bank (the Bank). The Bank’s lending activities focus on commercial business lending. The Bank also originates consumer loans, real estate construction and land development loans, and one- to four-family residential loans. The Bank’s investment securities available for sale include the United States treasury and the United States Government-sponsored agencies; municipal securities; mortgage-backed securities and collateralized mortgage obligations, which include residential and commercial; collateralized loan obligations; corporate obligations, and other securities. The Bank’s primary sources of funds are deposits and loan repayments. Borrowings are used on a short-term basis to compensate for reductions in other sources of funds, such as deposit inflows.

Southern First Bancshares Company Profile

Southern First Bancshares, Inc. is a bank holding company that owns the capital stock of Southern First Bank (the Bank), a South Carolina state bank, and all of the stock of Greenville First Statutory Trust I and II (the Trusts). The Bank is a commercial bank with approximately nine retail offices located in Greenville, Columbia and Charleston, South Carolina. The Bank is primarily engaged in the business of accepting demand deposits and savings deposits insured by the Federal Deposit Insurance Corporation (the FDIC) and providing commercial, consumer and mortgage loans to the public. In addition to deposit and loan services, the Company offers other bank services, such as Internet banking, cash management services, safe deposit boxes, direct deposit and automatic drafts for various accounts. The Bank offers a range of lending services, including real estate, commercial, and equity-line consumer loans to individuals and small- to medium-sized businesses, and professional firms.

Receive News & Ratings for Heritage Financial Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Heritage Financial Corporation and related companies with MarketBeat.com's FREE daily email newsletter.