West Bancorporation (NASDAQ:WTBA) versus TFS Financial (NASDAQ:TFSL) Critical Review

TFS Financial (NASDAQ:TFSL) and West Bancorporation (NASDAQ:WTBA) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, analyst recommendations and risk.

Earnings and Valuation

This table compares TFS Financial and West Bancorporation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TFS Financial	$791.96 million	4.82	$90.96 million	$0.32	42.53
West Bancorporation	$202.45 million	1.96	$32.56 million	$1.91	12.26

TFS Financial has higher revenue and earnings than West Bancorporation. West Bancorporation is trading at a lower price-to-earnings ratio than TFS Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares TFS Financial and West Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TFS Financial	11.29%	4.79%	0.52%
West Bancorporation	16.08%	14.28%	0.88%

Institutional and Insider Ownership

9.8% of TFS Financial shares are owned by institutional investors. Comparatively, 44.3% of West Bancorporation shares are owned by institutional investors. 0.7% of TFS Financial shares are owned by insiders. Comparatively, 4.6% of West Bancorporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

TFS Financial has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500. Comparatively, West Bancorporation has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Dividends

TFS Financial pays an annual dividend of $1.13 per share and has a dividend yield of 8.3%. West Bancorporation pays an annual dividend of $1.00 per share and has a dividend yield of 4.3%. TFS Financial pays out 353.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. West Bancorporation pays out 52.4% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for TFS Financial and West Bancorporation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TFS Financial	0	2	1	0	2.33
West Bancorporation	0	1	1	1	3.00

TFS Financial presently has a consensus target price of $15.00, indicating a potential upside of 10.21%. West Bancorporation has a consensus target price of $24.00, indicating a potential upside of 2.48%. Given TFS Financial’s higher possible upside, analysts clearly believe TFS Financial is more favorable than West Bancorporation.

Summary

West Bancorporation beats TFS Financial on 10 of the 16 factors compared between the two stocks.

About TFS Financial

TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.

About West Bancorporation

West Bancorporation, Inc. operates as the financial holding company provides community banking and trust services to individuals and small- to medium-sized businesses in the United States. It offers deposit services, including checking, savings, and money market accounts, as well as time certificates of deposit. The company also provides loan products comprising commercial real estate loans, construction and land development loans, commercial lines of credit, and commercial term loans; consumer loans, including loans extended to individuals for household, family, and other personal expenditures not secured by real estate; and 1-4 family residential mortgages and home equity loans. In addition, it offers online and mobile banking, treasury management services including cash management, client-generated automated clearing house transactions, remote deposit, and fraud protection services; merchant credit card processing and corporate credit cards; and administration of estates, conservatorships, personal trusts, and agency accounts. The company was founded in 1893 and is headquartered in West Des Moines, Iowa.