Financial Analysis: FS Bancorp (NASDAQ:FSBW) vs. Summit State Bank (NASDAQ:SSBI)

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

Analyst Ratings

This is a summary of recent recommendations and price targets for Summit State Bank and FS Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Summit State Bank	1	0	0	0	1.00
FS Bancorp	0	1	1	0	2.50

FS Bancorp has a consensus target price of $41.00, suggesting a potential downside of 1.42%. Given FS Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe FS Bancorp is more favorable than Summit State Bank.

Institutional and Insider Ownership

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Summit State Bank	-1.41%	N/A	N/A
FS Bancorp	15.10%	10.84%	1.04%

Risk and Volatility

Summit State Bank has a beta of 0.18, meaning that its stock price is 82% less volatile than the S&P 500. Comparatively, FS Bancorp has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.

Earnings & Valuation

This table compares Summit State Bank and FS Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Summit State Bank	$62.91 million	1.45	-$3.66 million	($0.13)	-103.19
FS Bancorp	$206.39 million	1.52	$35.02 million	$4.10	10.14

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

Summary

FS Bancorp beats Summit State Bank on 14 of the 14 factors compared between the two stocks.

About Summit State Bank

Summit State Bank engages in providing an array of financial services to small and medium-sized businesses, their owners and employees, entrepreneurs, high net worth families, foundations, estates, and individual consumers. It specializes in business services, personal accounts, nonprofit programs, and mobile banking ranging from lending, checking, merchant, eBanking, automated teller machines, equity loans, and others. The company was founded on December 20, 1982 and is headquartered in Santa Rosa, CA.

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.