Head to Head Review: Sound Financial Bancorp (NASDAQ:SFBC) and Malaga Financial (OTCMKTS:MLGF)

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Sound Financial Bancorp and Malaga Financial, as reported by MarketBeat.com.

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

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Malaga Financial pays an annual dividend of $1.00 per share and has a dividend yield of 4.7%. Sound Financial Bancorp pays out 30.3% of its earnings in the form of a dividend. Malaga Financial pays out 45.9% 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 raised its dividend for 2 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	11.64%	6.70%	0.67%
Malaga Financial	N/A	N/A	N/A

Volatility and Risk

Sound Financial Bancorp has a beta of 0.05, suggesting that its stock price is 95% less volatile than the S&P 500. Comparatively, Malaga Financial has a beta of 0.1, suggesting that its stock price is 90% less volatile than the S&P 500.

Valuation & Earnings

This table compares Sound Financial Bancorp and Malaga Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	1.89	$7.16 million	$2.77	16.31
Malaga Financial	N/A	N/A	$21.55 million	$2.18	9.84

Malaga Financial has lower revenue, but higher earnings than Sound Financial Bancorp. Malaga Financial 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.

Insider & Institutional Ownership

68.9% of Sound Financial Bancorp shares are owned by institutional investors. Comparatively, 1.2% of Malaga Financial shares are owned by institutional investors. 12.6% of Sound Financial Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Sound Financial Bancorp beats Malaga Financial on 11 of the 14 factors compared between the two stocks.

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.

About Malaga Financial

Malaga Financial Corporation operates as the holding company for Malaga Bank that provides various community banking products and services to personal and business customers. It offers checking, savings, NOW, and money market accounts, certificates of deposits, business banking, consumer, and demand deposits. The company also provides commercial real estate, single and multi-family residential mortgage, consumer, 14-unit investment property, construction, personal, and business loans; home equity lines of credit; and certificates of deposit. In addition, it offers coupon redemption, direct deposit, overdraft lines of credit, telephone transfers, U.S. savings bond redemption, and wire transfer services; and ATM and VISA debit cards, bank by mail, medallion signature guarantee, night depository, notary, safe deposit boxes, and trust deed note collection services. Further, the company provides online banking services, including bill payer, e-statements, and mobile banking services. The company was incorporated in 2002 and is headquartered in Palos Verdes Estates, California.