Head to Head Comparison: Heritage Financial (NASDAQ:HFWA) & First Savings Financial Group (NASDAQ:FSFG)

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

Volatility & Risk

Heritage Financial has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, First Savings Financial Group has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500.

Profitability

This table compares Heritage Financial and First Savings Financial Group’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%
First Savings Financial Group	14.92%	10.60%	0.79%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Heritage Financial and First Savings Financial Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	2	1	0	2.33
First Savings Financial Group	0	0	3	0	3.00

Heritage Financial currently has a consensus price target of $27.67, suggesting a potential upside of 12.83%. First Savings Financial Group has a consensus price target of $32.33, suggesting a potential upside of 19.44%. Given First Savings Financial Group’s stronger consensus rating and higher probable upside, analysts clearly believe First Savings Financial Group is more favorable than Heritage Financial.

Insider & Institutional Ownership

78.3% of Heritage Financial shares are owned by institutional investors. Comparatively, 35.2% of First Savings Financial Group shares are owned by institutional investors. 1.8% of Heritage Financial shares are owned by company insiders. Comparatively, 16.1% of First Savings Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Heritage Financial and First Savings Financial Group”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	3.68	$43.26 million	$1.43	17.15
First Savings Financial Group	$134.52 million	1.40	$13.59 million	$3.09	8.76

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

Dividends

Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.9%. First Savings Financial Group pays an annual dividend of $0.64 per share and has a dividend yield of 2.4%. Heritage Financial pays out 67.1% of its earnings in the form of a dividend. First Savings Financial Group pays out 20.7% 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 and First Savings Financial Group has increased its dividend for 12 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Heritage Financial beats First Savings Financial Group on 10 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 First Savings Financial Group

First Savings Financial Group, Inc. operates as the bank holding company for First Savings Bank that provides various financial services to consumers and businesses in southern Indiana. The company operates through three segments: Core Banking, SBA Lending, and Mortgage Banking. It accepts deposits, such as checking accounts, NOW and money market accounts, regular savings accounts, and time deposits. The company also provides loans, including one-to four-family residential real estate, commercial real estate, construction, land and land development, multi-family real estate, and commercial business loans, as well as consumer loans, such as automobile and truck loans, home equity lines of credit, home improvement loans, unsecured loans, boat and mobile home loans, loans secured by savings deposits, and other personal loans. In addition, it is involved in the mortgage banking; investment activities; and the provision of property and casualty insurance products, and reinsurance to other third-party insurance captives. First Savings Financial Group, Inc. was incorporated in 2008 and is headquartered in Jeffersonville, Indiana.