Reviewing Heritage Financial (NASDAQ:HFWA) & Southern Banc (OTCMKTS:SRNN)

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

Institutional and Insider Ownership

78.3% of Heritage Financial shares are owned by institutional investors. 1.8% of Heritage Financial shares are owned by insiders. Comparatively, 22.0% of Southern Banc shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Heritage Financial and Southern Banc, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	2	1	0	2.33
Southern Banc	0	0	0	0	0.00

Heritage Financial presently has a consensus target price of $27.6667, indicating a potential upside of 15.23%. Given Heritage Financial’s stronger consensus rating and higher possible upside, equities analysts clearly believe Heritage Financial is more favorable than Southern Banc.

Volatility & Risk

Heritage Financial has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500. Comparatively, Southern Banc has a beta of -0.05, indicating that its stock price is 105% less volatile than the S&P 500.

Earnings and Valuation

This table compares Heritage Financial and Southern Banc”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$225.94 million	3.61	$43.26 million	$1.43	16.79
Southern Banc	$10.60 million	0.86	$1.60 million	$1.56	7.21

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Financial	15.22%	7.34%	0.90%
Southern Banc	9.99%	7.75%	1.02%

Summary

Heritage Financial beats Southern Banc on 10 of the 14 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 Southern Banc

The Southern Banc Company, Inc. operates as the holding company for The Southern Bank company that provides various banking products and services in Alabama. The company’s personal banking products include checking accounts, home mortgage loans, home equity loans, auto loans, and personal loans. Its business banking products comprise business checking accounts, cash flow management, real estate lending, and equipment financing. The Southern Banc Company, Inc. was founded in 1936 and is based in Gadsden, Alabama.