Head-To-Head Analysis: FS Bancorp (NASDAQ:FSBW) versus ESSA Bancorp (NASDAQ:ESSA)

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

Profitability

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

Net Margins Return on Equity Return on Assets
FS Bancorp 25.72% 12.15% 1.37%
ESSA Bancorp 15.62% 6.48% 0.64%

Earnings & Valuation

This table compares FS Bancorp and ESSA Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FS Bancorp $89.18 million 2.45 $24.35 million $4.67 10.41
ESSA Bancorp $72.32 million 2.41 $6.53 million N/A N/A

FS Bancorp has higher revenue and earnings than ESSA Bancorp.

Analyst Ratings

This is a breakdown of current ratings and target prices for FS Bancorp and ESSA Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FS Bancorp 0 0 1 0 3.00
ESSA Bancorp 0 1 0 0 2.00

FS Bancorp currently has a consensus price target of $60.00, suggesting a potential upside of 23.46%. Given FS Bancorp’s stronger consensus rating and higher possible upside, equities analysts clearly believe FS Bancorp is more favorable than ESSA Bancorp.

Institutional and Insider Ownership

56.3% of FS Bancorp shares are owned by institutional investors. Comparatively, 43.0% of ESSA Bancorp shares are owned by institutional investors. 8.6% of FS Bancorp shares are owned by company insiders. Comparatively, 7.4% of ESSA Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

FS Bancorp has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, ESSA Bancorp has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500.

Dividends

FS Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. ESSA Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.6%. FS Bancorp pays out 12.8% of its earnings in the form of a dividend. FS Bancorp has raised its dividend for 5 consecutive years.

Summary

FS Bancorp beats ESSA Bancorp on 13 of the 16 factors compared between the two stocks.

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, automobile, direct home improvement, loans on deposit, and recreational loans. As of December 31, 2018, it operated 21 full-service branches and 8 home loan production offices in various suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, Thurston, and Lewis counties; and 1 loan production office in the market area of the Tri-Cities. The company was founded in 1936 and is based in Mountlake Terrace, Washington.

About ESSA Bancorp

ESSA Bancorp, Inc. operates as the holding company for ESSA Bank & Trust that provides a range of financial services to individuals, families, and businesses in Pennsylvania. The company accepts savings accounts, interest bearing demand accounts, checking accounts, money market accounts, club accounts, certificates of deposit and IRAs, and other qualified plan accounts, as well as commercial checking accounts. Its loan portfolio includes first mortgage loans for the purchase, construction, or refinancing of one- to four-family residential real estate property; commercial real estate loans; home equity loans and lines of credit; and commercial and consumer loans, including indirect auto loans, as well as loans secured by deposits and personal unsecured loans. In addition, it offers insurance benefits consulting services, such as health insurance, life insurance, short term and long term disability, dental, vision, 401(K) retirement planning, and individual health products, as well as asset management and trust, and investment services. As of September 30, 2018, the company operated 22 full-service banking offices, including 7 offices in Monroe County, 3 offices in Lehigh County, 6 offices in Northampton County, 1 office in Lackawanna County, 1 office in Luzerne County, 1 office in Chester County, 2 offices in Delaware County, and 1 office in Montgomery County, Pennsylvania. ESSA Bancorp, Inc. was founded in 1916 and is based in Stroudsburg, Pennsylvania.

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