Comparing SB Financial Group (NASDAQ:SBFG) & Waterstone Financial (NASDAQ:WSBF)

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

Analyst Ratings

This is a breakdown of current ratings for Waterstone Financial and SB Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	1	0	3.00
SB Financial Group	0	2	0	1	2.67

SB Financial Group has a consensus price target of $32.00, suggesting a potential upside of 4.85%. Given SB Financial Group’s higher probable upside, analysts plainly believe SB Financial Group is more favorable than Waterstone Financial.

Earnings & Valuation

This table compares Waterstone Financial and SB Financial Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterstone Financial	$201.29 million	1.77	$26.40 million	$1.72	11.53
SB Financial Group	$91.03 million	2.10	$13.97 million	$2.67	11.43

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

Profitability

This table compares Waterstone Financial and SB Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	14.57%	8.64%	1.33%
SB Financial Group	17.17%	11.47%	1.04%

Volatility & Risk

Waterstone Financial has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, SB Financial Group has a beta of 0.18, meaning that its stock price is 82% less volatile than the S&P 500.

Insider & Institutional Ownership

62.7% of Waterstone Financial shares are owned by institutional investors. Comparatively, 66.7% of SB Financial Group shares are owned by institutional investors. 6.0% of Waterstone Financial shares are owned by company insiders. Comparatively, 6.0% of SB Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Waterstone Financial pays an annual dividend of $0.68 per share and has a dividend yield of 3.4%. SB Financial Group pays an annual dividend of $0.64 per share and has a dividend yield of 2.1%. Waterstone Financial pays out 39.5% of its earnings in the form of a dividend. SB Financial Group pays out 24.0% 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. SB Financial Group has raised its dividend for 12 consecutive years.

About Waterstone Financial

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. It also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. The company was founded in 1921 and is based in Wauwatosa, Wisconsin.

About SB Financial Group

SB Financial Group, Inc. operates as the financial holding company for the State Bank and Trust Company that provides a range of commercial banking and wealth management services to individual and corporate customers primarily in Ohio, Indiana, and Michigan. It offers checking, savings, money market accounts, as well as time certificates of deposit; and commercial, consumer, agricultural, and residential mortgage loans. The company also provides automatic teller machine, personal and corporate trust, commercial leasing, bank credit card, safe deposit box rental, internet banking, private client group, and other personalized banking products and services; and various trust and financial services comprising asset management services for individuals and corporate employee benefit plans, as well as brokerage services. In addition, it sells insurance products to retail and commercial customers. The company was formerly known as Rurban Financial Corp. and changed its name to SB Financial Group, Inc. in April 2013. SB Financial Group, Inc. was founded in 1902 and is based in Defiance, Ohio.