Analyzing Pathfinder Bancorp (NASDAQ:PBHC) and OceanFirst Financial (NASDAQ:OCFC)

Pathfinder Bancorp (NASDAQ:PBHC) and OceanFirst Financial (NASDAQ:OCFC) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Insider & Institutional Ownership

26.7% of Pathfinder Bancorp shares are owned by institutional investors. Comparatively, 71.0% of OceanFirst Financial shares are owned by institutional investors. 15.4% of Pathfinder Bancorp shares are owned by insiders. Comparatively, 5.1% of OceanFirst Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Pathfinder Bancorp and OceanFirst Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pathfinder Bancorp	0	1	0	0	2.00
OceanFirst Financial	0	3	3	1	2.71

OceanFirst Financial has a consensus target price of $21.60, suggesting a potential upside of 7.36%. Given OceanFirst Financial’s stronger consensus rating and higher possible upside, analysts plainly believe OceanFirst Financial is more favorable than Pathfinder Bancorp.

Dividends

Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.8%. OceanFirst Financial pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. Pathfinder Bancorp pays out 33.3% of its earnings in the form of a dividend. OceanFirst Financial pays out 62.0% 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. Pathfinder Bancorp has increased its dividend for 1 consecutive years.

Volatility & Risk

Pathfinder Bancorp has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, OceanFirst Financial has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Earnings & Valuation

This table compares Pathfinder Bancorp and OceanFirst Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pathfinder Bancorp	$87.92 million	0.77	$3.38 million	$1.20	11.79
OceanFirst Financial	$692.36 million	1.67	$100.07 million	$1.29	15.60

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

Profitability

This table compares Pathfinder Bancorp and OceanFirst Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pathfinder Bancorp	9.09%	6.37%	0.53%
OceanFirst Financial	11.77%	5.02%	0.62%

Summary

OceanFirst Financial beats Pathfinder Bancorp on 14 of the 18 factors compared between the two stocks.

About Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.

About OceanFirst Financial

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.