Financial Analysis: EFG International (OTCMKTS:EFGXY) versus Waterstone Financial (NASDAQ:WSBF)

Waterstone Financial (NASDAQ:WSBF) and EFG International (OTCMKTS:EFGXY) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Dividends

Waterstone Financial pays an annual dividend of $0.68 per share and has a dividend yield of 3.3%. EFG International pays an annual dividend of C$0.18 per share and has a dividend yield of 0.9%. Waterstone Financial pays out 39.5% of its earnings in the form of a dividend. EFG International pays out 128.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Waterstone Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Waterstone Financial and EFG International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	1	0	3.00
EFG International	0	2	1	0	2.33

Profitability

This table compares Waterstone Financial and EFG International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	14.57%	8.66%	1.33%
EFG International	N/A	N/A	N/A

Earnings and Valuation

This table compares Waterstone Financial and EFG International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterstone Financial	$201.29 million	1.87	$26.40 million	$1.72	12.14
EFG International	N/A	N/A	N/A	C$0.14	148.05

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

Institutional & Insider Ownership

62.7% of Waterstone Financial shares are owned by institutional investors. 6.0% of Waterstone Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Waterstone Financial beats EFG International on 10 of the 11 factors compared between the two stocks.

About Waterstone Financial

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. It also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. The company was founded in 1921 and is based in Wauwatosa, Wisconsin.

About EFG International

EFG International AG, together with its subsidiaries, provides private banking, wealth management, and asset management services. The company offers investment solutions, including discretionary mandates, structured products, and trading services; wealth planning and trust services; credit and financing services, such as Islamic, property, and investment financing; and eBanking services, including mobile banking and security services. It also provides other banking services consisting of custody, foreign exchange and treasury, and trading services, as well as accounts and cards, and metals; and supports independent asset managers to set up private label funds. The company operates in Europe, Asia Pacific, the Americas, and the Middle East. EFG International AG was founded in 1995 and is headquartered in Zurich, Switzerland.