Financial Comparison: Sound Financial Bancorp (NASDAQ:SFBC) vs. Simmons First National (NASDAQ:SFNC)

Simmons First National (NASDAQ:SFNC) and Sound Financial Bancorp (NASDAQ:SFBC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Simmons First National and Sound Financial Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Simmons First National	0	5	2	2	2.67
Sound Financial Bancorp	0	0	1	0	3.00

Simmons First National presently has a consensus target price of $24.50, suggesting a potential upside of 8.11%. Given Simmons First National’s higher possible upside, equities analysts plainly believe Simmons First National is more favorable than Sound Financial Bancorp.

Valuation and Earnings

This table compares Simmons First National and Sound Financial Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Simmons First National	$1.43 billion	2.29	-$397.55 million	($2.53)	-8.96
Sound Financial Bancorp	$40.28 million	2.99	$7.16 million	$3.12	15.05

Sound Financial Bancorp has lower revenue, but higher earnings than Simmons First National. Simmons First National is trading at a lower price-to-earnings ratio than Sound Financial Bancorp, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Simmons First National has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.01, meaning that its stock price is 99% less volatile than the S&P 500.

Profitability

This table compares Simmons First National and Sound Financial Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Simmons First National	-24.64%	8.32%	1.16%
Sound Financial Bancorp	12.89%	7.31%	0.74%

Insider and Institutional Ownership

27.6% of Simmons First National shares are owned by institutional investors. Comparatively, 68.8% of Sound Financial Bancorp shares are owned by institutional investors. 0.8% of Simmons First National shares are owned by insiders. Comparatively, 12.3% of Sound Financial Bancorp shares are owned by 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.

Dividends

Simmons First National pays an annual dividend of $0.86 per share and has a dividend yield of 3.8%. Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Simmons First National pays out -34.0% of its earnings in the form of a dividend. Sound Financial Bancorp pays out 26.9% 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. Simmons First National has increased its dividend for 14 consecutive years and Sound Financial Bancorp has increased its dividend for 2 consecutive years. Simmons First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Simmons First National beats Sound Financial Bancorp on 10 of the 18 factors compared between the two stocks.

About Simmons First National

Simmons First National Corporation operates as the holding company for Simmons Bank that provides banking and other financial products and services to individuals and businesses. The company offers checking, savings, and time deposits; consumer, real estate, and commercial loans; agricultural finance, equipment, and small business administration lending; trust and fiduciary services; credit cards; investment management products; treasury management; insurance products; and securities and investment services. It also provides ATM services; Internet and mobile banking platforms; overdraft facilities; and safe deposit boxes. The company was founded in 1903 and is headquartered in Pine Bluff, Arkansas.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.