Analyzing Hanmi Financial (NASDAQ:HAFC) & Sound Financial Bancorp (NASDAQ:SFBC)

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

Insider and Institutional Ownership

88.7% of Hanmi Financial shares are owned by institutional investors. Comparatively, 68.9% of Sound Financial Bancorp shares are owned by institutional investors. 1.6% of Hanmi Financial shares are owned by insiders. Comparatively, 12.6% of Sound Financial Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanmi Financial	0	3	2	0	2.40
Sound Financial Bancorp	0	1	0	0	2.00

Hanmi Financial currently has a consensus price target of $32.17, suggesting a potential upside of 4.61%. Given Hanmi Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Hanmi Financial is more favorable than Sound Financial Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hanmi Financial	18.05%	10.31%	1.03%
Sound Financial Bancorp	11.64%	6.70%	0.67%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanmi Financial	$444.90 million	2.06	$76.09 million	$2.68	11.47
Sound Financial Bancorp	$61.52 million	1.73	$7.16 million	$2.77	14.97

Hanmi Financial has higher revenue and earnings than Sound Financial Bancorp. Hanmi 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.

Dividends

Hanmi Financial pays an annual dividend of $1.12 per share and has a dividend yield of 3.6%. Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Hanmi Financial pays out 41.8% 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. Hanmi Financial has increased its dividend for 1 consecutive years and Sound Financial Bancorp has increased its dividend for 2 consecutive years.

Risk and Volatility

Hanmi Financial has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.05, indicating that its stock price is 95% less volatile than the S&P 500.

Summary

Hanmi Financial beats Sound Financial Bancorp on 12 of the 17 factors compared between the two stocks.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.

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.