Financial Analysis: Sound Financial Bancorp (NASDAQ:SFBC) versus BEO Bancorp (OTCMKTS:BEOB)

BEO Bancorp (OTCMKTS:BEOB) and Sound Financial Bancorp (NASDAQ:SFBC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Volatility & Risk

BEO Bancorp has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.11, indicating that its share price is 89% less volatile than the S&P 500.

Institutional & Insider Ownership

68.9% of Sound Financial Bancorp shares are held by institutional investors. 12.4% of Sound Financial Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BEO Bancorp	$57.76 million	2.28	$16.19 million	$13.20	8.26
Sound Financial Bancorp	$61.52 million	1.78	$7.16 million	$2.77	15.42

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

Dividends

BEO Bancorp pays an annual dividend of $2.00 per share and has a dividend yield of 1.8%. Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. BEO Bancorp pays out 15.2% of its earnings in the form of a dividend. Sound Financial Bancorp pays out 30.3% 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. Sound Financial Bancorp has increased its dividend for 2 consecutive years. Sound Financial Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BEO Bancorp	N/A	N/A	N/A
Sound Financial Bancorp	11.64%	6.76%	0.67%

Analyst Recommendations

This is a breakdown of current recommendations for BEO Bancorp and Sound Financial Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BEO Bancorp	0	0	0	0	0.00
Sound Financial Bancorp	0	1	0	0	2.00

Summary

Sound Financial Bancorp beats BEO Bancorp on 10 of the 15 factors compared between the two stocks.

About BEO Bancorp

BEO Bancorp operates as the bank holding company for Bank of Eastern Oregon that provides commercial and consumer financing, banking and mortgage lending, and other services in Northeastern Oregon and Southeastern Washington. The company offers checking, money market, time deposits, and savings accounts; and certificates of deposit. It also provides commercial, agricultural, real estate, installment, credit card, mortgage, term, home, construction, farm, and refinancing loans; lines of credit; home enhancement loan programs; Internet banking and bill payment services; business sweep and banking services; and automated teller machines and safe deposit facilities, as well as originates and sells mortgage loans into the secondary market. The company was founded in 1945 and is based in Heppner, Oregon.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.