United Community Financial Corp. (NASDAQ: UCFC) and BofI Holding (NASDAQ:BOFI) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares United Community Financial Corp. and BofI Holding’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Community Financial Corp. 18.95% 8.90% 1.00%
BofI Holding 29.53% 17.35% 1.61%

Dividends

United Community Financial Corp. pays an annual dividend of $0.16 per share and has a dividend yield of 1.6%. BofI Holding does not pay a dividend. United Community Financial Corp. pays out 39.0% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares United Community Financial Corp. and BofI Holding’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Community Financial Corp. $91.26 million 5.40 $20.39 million $0.41 24.17
BofI Holding $370.30 million 4.72 $132.30 million $2.08 13.20

BofI Holding has higher revenue and earnings than United Community Financial Corp.. BofI Holding is trading at a lower price-to-earnings ratio than United Community Financial Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and target prices for United Community Financial Corp. and BofI Holding, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Community Financial Corp. 1 0 2 0 2.33
BofI Holding 0 1 4 0 2.80

United Community Financial Corp. presently has a consensus price target of $10.50, indicating a potential upside of 5.95%. BofI Holding has a consensus price target of $34.00, indicating a potential upside of 23.82%. Given BofI Holding’s stronger consensus rating and higher probable upside, analysts clearly believe BofI Holding is more favorable than United Community Financial Corp..

Risk & Volatility

United Community Financial Corp. has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, BofI Holding has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Institutional and Insider Ownership

58.2% of United Community Financial Corp. shares are owned by institutional investors. Comparatively, 88.1% of BofI Holding shares are owned by institutional investors. 3.6% of United Community Financial Corp. shares are owned by company insiders. Comparatively, 6.2% of BofI Holding shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

BofI Holding beats United Community Financial Corp. on 12 of the 16 factors compared between the two stocks.

United Community Financial Corp. Company Profile

United Community Financial Corp. is financial services holding company. The Company’s subsidiaries include The Home Savings and Loan Company of Youngstown, Ohio (Home Savings or the Bank), HSB Insurance, LLC and HSB Capital, LLC. The principal business of Home Savings is the origination of mortgage loans, including construction loans, on residential and nonresidential real estate located in Home Savings’ primary market area. In addition to real estate lending, Home Savings originates commercial loans and various types of consumer loans. Funds for lending and other investment activities are obtained primarily from retail deposits. HSB Insurance, LLC is an insurance agency that offers a range of insurance products for business and residential customers, which include, auto, homeowners, life-health, commercial, surety bonds and aviation. HSB Capital, LLC provides mezzanine funding for customers. Mezzanine loans are offered to customers in United Community’s market area.

BofI Holding Company Profile

BofI Holding, Inc. (BofI) is the holding company for BofI Federal Bank (the Bank). The Bank is a diversified financial services company. The Bank provides consumer and business banking products through its branchless, low-cost distribution channels and affinity partners. The Bank has deposit and loan customers, including consumer and business checking, savings and time deposit accounts and financing for single family and multifamily residential properties, small-to-medium size businesses in target sectors, and selected specialty finance receivables. The Bank distributes its deposit products through a range of retail distribution channels, and its deposits consist of demand, savings and time deposits accounts. Its mortgage-backed securities consist primarily of mortgage pass-through securities issued by government-sponsored entities and non-agency collateralized mortgage obligations and pass-through mortgage-backed securities issued by private sponsors.

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