Critical Survey: FS Bancorp (NASDAQ:FSBW) and Sierra Bancorp (NASDAQ:BSRR)

Sierra Bancorp (NASDAQ:BSRR) and FS Bancorp (NASDAQ:FSBW) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Dividends

Sierra Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. FS Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 2.7%. Sierra Bancorp pays out 34.8% of its earnings in the form of a dividend. FS Bancorp 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. Sierra Bancorp has raised its dividend for 2 consecutive years and FS Bancorp has raised its dividend for 12 consecutive years.

Earnings & Valuation

This table compares Sierra Bancorp and FS Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sierra Bancorp	$203.87 million	2.31	$40.56 million	$2.87	12.34
FS Bancorp	$219.52 million	1.44	$33.35 million	$4.28	9.81

Sierra Bancorp has higher earnings, but lower revenue than FS Bancorp. FS Bancorp is trading at a lower price-to-earnings ratio than Sierra Bancorp, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

55.4% of Sierra Bancorp shares are held by institutional investors. Comparatively, 63.9% of FS Bancorp shares are held by institutional investors. 11.9% of Sierra Bancorp shares are held by insiders. Comparatively, 12.7% of FS Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Sierra Bancorp and FS Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	19.70%	11.17%	1.08%
FS Bancorp	15.19%	11.16%	1.06%

Analyst Recommendations

This is a breakdown of recent recommendations for Sierra Bancorp and FS Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	2	2	0	2.50
FS Bancorp	0	1	1	0	2.50

Sierra Bancorp currently has a consensus target price of $34.50, indicating a potential downside of 2.57%. FS Bancorp has a consensus target price of $45.00, indicating a potential upside of 7.19%. Given FS Bancorp’s higher possible upside, analysts plainly believe FS Bancorp is more favorable than Sierra Bancorp.

Risk & Volatility

Sierra Bancorp has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, FS Bancorp has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Summary

Sierra Bancorp beats FS Bancorp on 9 of the 16 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

About FS Bancorp

FS Bancorp, Inc. operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches. The company operates in two segments, Commercial and Consumer Banking; and Home Lending. It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans. It operates full bank service branches and home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, and Thurston counties; and a loan production office in the market area of the Tri-Cities. FS Bancorp, Inc. was founded in 1936 and is headquartered in Mountlake Terrace, Washington.