Critical Survey: Carver Bancorp (NASDAQ:CARV) vs. Heritage Financial (NASDAQ:HFWA)

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

Earnings & Valuation

This table compares Heritage Financial and Carver Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$317.18 million	2.67	$43.26 million	$1.65	15.09
Carver Bancorp	$22.74 million	0.27	-$13.74 million	($2.49)	-0.49

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

Profitability

This table compares Heritage Financial and Carver Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Financial	17.27%	8.21%	1.03%
Carver Bancorp	-34.89%	-171.55%	-1.82%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Heritage Financial and Carver Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	3	2	0	2.40
Carver Bancorp	1	0	0	0	1.00

Heritage Financial currently has a consensus target price of $29.33, suggesting a potential upside of 17.84%. Given Heritage Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Heritage Financial is more favorable than Carver Bancorp.

Institutional & Insider Ownership

78.3% of Heritage Financial shares are held by institutional investors. Comparatively, 18.2% of Carver Bancorp shares are held by institutional investors. 1.8% of Heritage Financial shares are held by company insiders. Comparatively, 1.3% of Carver Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Heritage Financial has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500. Comparatively, Carver Bancorp has a beta of 1.5, meaning that its stock price is 50% more volatile than the S&P 500.

Summary

Heritage Financial beats Carver Bancorp on 13 of the 14 factors compared between the two stocks.

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.

About Carver Bancorp

Carver Bancorp, Inc. operates as the holding company for Carver Federal Savings Bank that provides consumer and commercial banking services for consumers, businesses, non-profit organizations, and governmental and quasi-governmental agencies primarily in New York. It accepts various deposit products, including demand, savings, and time deposits; passbook and statement accounts, and certificates of deposit; and individual retirement accounts. The company provides lending products, such as one-to-four family residential, multifamily real estate, and commercial real estate lending; and construction, business and small business administration, and consumer and other loans. In addition, it offers other consumer and commercial banking products and services, including debit cards, online account opening and banking, online bill pay, and telephone banking, as well as check cashing, wire transfer, bill payment, reloadable prepaid card, and money order services. Carver Bancorp, Inc. was founded in 1948 and is headquartered in New York, New York.