Contrasting Lake Shore Bancorp (NASDAQ:LSBK) & Dime Community Bancshares (NASDAQ:DCOM)

Dime Community Bancshares (NASDAQ:DCOM) and Lake Shore Bancorp (NASDAQ:LSBK) 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, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Valuation & Earnings

This table compares Dime Community Bancshares and Lake Shore Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dime Community Bancshares	$509.18 million	3.70	$110.68 million	$3.08	13.87
Lake Shore Bancorp	$30.24 million	4.87	$7.27 million	$1.12	16.74

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Dime Community Bancshares and Lake Shore Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dime Community Bancshares	0	2	4	0	2.67
Lake Shore Bancorp	0	0	0	1	4.00

Dime Community Bancshares presently has a consensus target price of $45.50, suggesting a potential upside of 6.54%. Given Dime Community Bancshares’ higher probable upside, equities analysts clearly believe Dime Community Bancshares is more favorable than Lake Shore Bancorp.

Dividends

Dime Community Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Dime Community Bancshares pays out 32.5% of its earnings in the form of a dividend. Lake Shore Bancorp pays out 32.1% 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. Dime Community Bancshares has raised its dividend for 2 consecutive years. Dime Community Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Dime Community Bancshares has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Insider and Institutional Ownership

75.3% of Dime Community Bancshares shares are owned by institutional investors. Comparatively, 8.7% of Lake Shore Bancorp shares are owned by institutional investors. 7.4% of Dime Community Bancshares shares are owned by company insiders. Comparatively, 8.4% of Lake Shore Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Dime Community Bancshares and Lake Shore Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dime Community Bancshares	15.15%	9.12%	0.83%
Lake Shore Bancorp	20.62%	5.84%	1.15%

Summary

Dime Community Bancshares beats Lake Shore Bancorp on 11 of the 18 factors compared between the two stocks.

About Dime Community Bancshares

Dime Community Bancshares, Inc. operates as the holding company for Dime Community Bank that engages in the provision of various commercial banking and financial services. The company accepts time, savings, and demand deposits from the businesses, consumers, and local municipalities. It also offers commercial real estate loans; multi-family mortgage loans; residential mortgage loans; letters of credit; secured and unsecured commercial and consumer loans; lines of credit; home equity loans; and construction and land loans. In addition, the company invests in Federal Home Loan Bank, Federal National Mortgage Association, Government National Mortgage Association, and Federal Home Loan Mortgage Corporation mortgage-backed securities, collateralized mortgage obligations, and other asset backed securities; U.S. Treasury securities; New York state and local municipal obligations; U.S. government-sponsored enterprise securities; and corporate bonds. Further, it offers certificate of deposit account registry services and insured cash sweep programs; federal deposit insurance corporation insurance; merchant credit and debit card processing, automated teller machines, cash management services, lockbox processing, online banking services, remote deposit capture, safe deposit boxes, and individual retirement accounts; investment products and services through a third-party broker dealer; and title insurance broker services for small and medium sized businesses, and municipal and consumer relationships. The company was founded in 1910 and is headquartered in Hauppauge, New York.

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.