Reviewing Northeast Bancorp (NASDAQ:NBN) & Timberland Bancorp (NASDAQ:TSBK)

Northeast Bancorp (NASDAQ:NBN) and Timberland Bancorp (NASDAQ:TSBK) 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, earnings, analyst recommendations, institutional ownership, profitability, valuation and dividends.

Insider & Institutional Ownership

65.5% of Timberland Bancorp shares are held by institutional investors. 14.2% of Northeast Bancorp shares are held by company insiders. Comparatively, 3.6% of Timberland Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Timberland Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 3.0%. Northeast Bancorp pays out 0.4% of its earnings in the form of a dividend. Timberland Bancorp pays out 30.1% 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. Timberland Bancorp has raised its dividend for 13 consecutive years. Timberland Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Northeast Bancorp and Timberland Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Bancorp	$351.00 million	2.82	$83.44 million	$10.37	11.62
Timberland Bancorp	$114.63 million	2.69	$29.16 million	$3.86	10.13

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

Risk & Volatility

Northeast Bancorp has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Timberland Bancorp has a beta of 0.36, suggesting that its share price is 64% less volatile than the S&P 500.

Profitability

This table compares Northeast Bancorp and Timberland Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northeast Bancorp	24.16%	17.73%	2.06%
Timberland Bancorp	26.17%	11.73%	1.54%

Analyst Ratings

This is a summary of current ratings and target prices for Northeast Bancorp and Timberland Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Bancorp	0	1	1	0	2.50
Timberland Bancorp	0	0	1	0	3.00

Northeast Bancorp presently has a consensus target price of $102.00, suggesting a potential downside of 15.37%. Given Northeast Bancorp’s higher probable upside, equities research analysts plainly believe Northeast Bancorp is more favorable than Timberland Bancorp.

Summary

Northeast Bancorp beats Timberland Bancorp on 11 of the 16 factors compared between the two stocks.

About Northeast Bancorp

Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.

About Timberland Bancorp

Timberland Bancorp, Inc. operates as the bank holding company for Timberland Bank that provides various community banking services in Washington. It offers various deposit products, including money market deposit, checking, and regular savings accounts, as well as certificates of deposit. The company also provides one-to four-family residential, multi-family, and commercial real estate loans; and construction lending products, such as custom and owner/builder, speculative one- to four-family, commercial, multi-family, land development, and land development. In addition, it offers consumer loans comprising home equity lines of credit and second mortgage loans, automobile loans, boat loans, motorcycle loans, recreational vehicle loans, savings account loans, and unsecured loans; and commercial business loans. Timberland Bancorp, Inc. was founded in 1915 and is headquartered in Hoquiam, Washington.