Head to Head Review: Kentucky First Federal Bancorp (NASDAQ:KFFB) and Heritage Financial (NASDAQ:HFWA)

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

Analyst Ratings

This is a summary of recent ratings for Kentucky First Federal Bancorp and Heritage Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kentucky First Federal Bancorp	0	1	0	0	2.00
Heritage Financial	1	2	3	0	2.33

Heritage Financial has a consensus target price of $30.50, suggesting a potential upside of 14.53%. Given Heritage Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Heritage Financial is more favorable than Kentucky First Federal Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kentucky First Federal Bancorp	6.67%	2.88%	0.38%
Heritage Financial	20.50%	8.71%	1.13%

Volatility and Risk

Kentucky First Federal Bancorp has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Institutional and Insider Ownership

3.2% of Kentucky First Federal Bancorp shares are held by institutional investors. Comparatively, 78.3% of Heritage Financial shares are held by institutional investors. 3.9% of Kentucky First Federal Bancorp shares are held by company insiders. Comparatively, 1.5% of Heritage Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Kentucky First Federal Bancorp and Heritage Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kentucky First Federal Bancorp	$19.74 million	1.75	$180,000.00	$0.17	25.12
Heritage Financial	$335.97 million	3.27	$67.53 million	$2.04	13.05

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

Summary

Heritage Financial beats Kentucky First Federal Bancorp on 12 of the 14 factors compared between the two stocks.

About Kentucky First Federal Bancorp

Kentucky First Federal Bancorp operates as the holding company for First Federal Savings and Loan Association of Hazard, and Frankfort First Bancorp, Inc. that provide various banking products and services in Kentucky. It accepts deposit products include passbook savings and certificate accounts, checking accounts, and individual retirement accounts. The company's loan portfolio comprises one-to four-family residential mortgage loans; construction loans; mortgage loans secured by multi-family property; nonresidential loans that are secured by commercial office buildings, churches, and properties used for other purposes; commercial non-mortgage loans; and consumer loans, such as home equity lines of credit, loans secured by savings deposits, automobile loans, and unsecured or personal loans. It also invests in mortgage-backed securities. The company was incorporated in 2005 and is based in Hazard, Kentucky. Kentucky First Federal Bancorp is a subsidiary of First Federal MHC.

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.