Comparing Heritage Financial (NASDAQ:HFWA) and Gouverneur Bancorp Inc./MD (OTCMKTS:GOVB)

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

Analyst Recommendations

This is a breakdown of recent ratings for Heritage Financial and Gouverneur Bancorp Inc./MD, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	2	1	0	2.33
Gouverneur Bancorp Inc./MD	0	0	0	0	0.00

Heritage Financial currently has a consensus target price of $27.67, indicating a potential upside of 12.83%. Given Heritage Financial’s stronger consensus rating and higher possible upside, equities analysts plainly believe Heritage Financial is more favorable than Gouverneur Bancorp Inc./MD.

Earnings and Valuation

This table compares Heritage Financial and Gouverneur Bancorp Inc./MD”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$317.18 million	2.62	$43.26 million	$1.43	17.15
Gouverneur Bancorp Inc./MD	$9.34 million	1.68	$540,000.00	$0.61	24.43

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

Profitability

This table compares Heritage Financial and Gouverneur Bancorp Inc./MD’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%
Gouverneur Bancorp Inc./MD	6.59%	N/A	N/A

Insider and Institutional Ownership

78.3% of Heritage Financial shares are held by institutional investors. Comparatively, 21.6% of Gouverneur Bancorp Inc./MD shares are held by institutional investors. 1.8% of Heritage Financial shares are held by company insiders. Comparatively, 3.1% of Gouverneur Bancorp Inc./MD shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.9%. Gouverneur Bancorp Inc./MD pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. Heritage Financial pays out 67.1% of its earnings in the form of a dividend. Gouverneur Bancorp Inc./MD pays out 26.2% 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. Heritage Financial has increased its dividend for 14 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Heritage Financial has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Gouverneur Bancorp Inc./MD has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Summary

Heritage Financial beats Gouverneur Bancorp Inc./MD on 13 of the 17 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 Gouverneur Bancorp Inc./MD

Gouverneur Bancorp, Inc. operates as the holding company for Gouverneur Savings and Loan Association that provides various banking products and services to individuals and businesses in New York. It accepts passbook savings, NOW, money market deposit, and checking accounts, as well as certificates of deposit. The company's loan products include mortgage loans, one- to four-family residential loans, commercial real estate loans, and multi-family residential real estate loans, residential and commercial construction loans, commercial land loans, home equity loans, lines of credit, commercial loans, automobiles, motorcycles, campers, boats, and other recreational vehicles, as well as personal secured and unsecured loans. It also invests in municipal bonds, U.S. Treasury securities, U.S. Government agencies and government-sponsored obligations, and mortgage-backed securities. In addition, the company offers online, mobile, bill pay, and telephone banking; electronic or paper statements; and ATM, debit cards, direct deposits, mobile remote deposit capture, automatic payments and transfers, bank checks, wire transfers, and safe deposit box services. It serves primarily the St. Lawrence County, and Jefferson and Lewis counties in New York State. The company was founded in 1892 and is headquartered in Gouverneur, New York.