Comparing FFW (OTCMKTS:FFWC) & Waterstone Financial (NASDAQ:WSBF)

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

Volatility & Risk

Waterstone Financial has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, FFW has a beta of -0.12, suggesting that its share price is 112% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Waterstone Financial and FFW, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	1	0	3.00
FFW	0	0	0	0	0.00

Dividends

Waterstone Financial pays an annual dividend of $0.68 per share and has a dividend yield of 3.5%. FFW pays an annual dividend of $1.24 per share and has a dividend yield of 2.4%. Waterstone Financial pays out 41.0% of its earnings in the form of a dividend. FFW pays out 21.4% 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.

Insider and Institutional Ownership

62.7% of Waterstone Financial shares are owned by institutional investors. 6.0% of Waterstone Financial shares are owned by company insiders. Comparatively, 17.0% of FFW shares are owned 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.

Earnings & Valuation

This table compares Waterstone Financial and FFW”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	1.77	$26.40 million	$1.66	11.86
FFW	$32.63 million	1.72	$5.54 million	$5.79	8.99

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	14.28%	8.48%	1.30%
FFW	18.80%	N/A	N/A

Summary

Waterstone Financial beats FFW on 11 of the 15 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 FFW

FFW Corporation operates as the bank holding company for Crossroads Bank that provides various banking products and services. The company offers checking and savings accounts, overdraft protection, consumer credit cards, and reorder checks. Its loan products include home equity, auto, RV, boat, motorcycle, and personal loans; mortgage loans; agricultural loans; commercial real estate equipment financing; revolving lines of credit and standby letters of credit; and equipment leasing, as well as commercial lending services. The company offers insurance products, such as auto, home and property, business, life and health, and specialty insurance; investment products and securities; and digital banking services. FFW Corporation was founded in 1920 and is based in Wabash, Indiana.