ServisFirst Bancshares (NYSE:SFBS – Get Free Report) and Heritage Financial (NASDAQ:HFWA – Get Free Report) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.
Profitability
This table compares ServisFirst Bancshares and Heritage Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ServisFirst Bancshares | 28.80% | 16.95% | 1.74% |
| Heritage Financial | 20.50% | 8.71% | 1.13% |
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for ServisFirst Bancshares and Heritage Financial, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ServisFirst Bancshares | 0 | 1 | 3 | 1 | 3.00 |
| Heritage Financial | 0 | 3 | 3 | 0 | 2.50 |
Insider & Institutional Ownership
67.3% of ServisFirst Bancshares shares are owned by institutional investors. Comparatively, 78.3% of Heritage Financial shares are owned by institutional investors. 6.5% of ServisFirst Bancshares shares are owned by company insiders. Comparatively, 1.5% of Heritage Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Dividends
ServisFirst Bancshares pays an annual dividend of $1.52 per share and has a dividend yield of 1.8%. Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.1%. ServisFirst Bancshares pays out 28.0% of its earnings in the form of a dividend. Heritage Financial pays out 47.1% 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. ServisFirst Bancshares has increased its dividend for 10 consecutive years and Heritage Financial has increased its dividend for 14 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares ServisFirst Bancshares and Heritage Financial”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| ServisFirst Bancshares | $1.02 billion | 4.60 | $276.60 million | $5.42 | 15.81 |
| Heritage Financial | $335.97 million | 3.75 | $67.53 million | $2.04 | 14.98 |
ServisFirst Bancshares has higher revenue and earnings than Heritage Financial. Heritage Financial is trading at a lower price-to-earnings ratio than ServisFirst Bancshares, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
ServisFirst Bancshares has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.
Summary
ServisFirst Bancshares beats Heritage Financial on 14 of the 17 factors compared between the two stocks.
About ServisFirst Bancshares
ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.
About Heritage Financial
Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. It accepts various deposit products, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. The company’s loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. It also originates loans that are guaranteed by the U.S. Small Business Administration; and provides objective advice from trusted advisers. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1927 and is headquartered in Olympia, Washington.
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