Critical Analysis: FS Bancorp (NASDAQ:FSBW) & CVB Financial (NASDAQ:CVBF)

FS Bancorp (NASDAQ:FSBW) and CVB Financial (NASDAQ:CVBF) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and target prices for FS Bancorp and CVB Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS Bancorp	0	1	1	0	2.50
CVB Financial	0	2	3	0	2.60

FS Bancorp currently has a consensus price target of $46.00, suggesting a potential upside of 10.34%. CVB Financial has a consensus price target of $24.13, suggesting a potential upside of 15.93%. Given CVB Financial’s stronger consensus rating and higher probable upside, analysts plainly believe CVB Financial is more favorable than FS Bancorp.

Volatility & Risk

FS Bancorp has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, CVB Financial has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
FS Bancorp	14.91%	10.88%	1.04%
CVB Financial	32.05%	9.16%	1.34%

Institutional and Insider Ownership

63.9% of FS Bancorp shares are owned by institutional investors. Comparatively, 74.2% of CVB Financial shares are owned by institutional investors. 12.9% of FS Bancorp shares are owned by insiders. Comparatively, 6.4% of CVB Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

FS Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 2.8%. CVB Financial pays an annual dividend of $0.80 per share and has a dividend yield of 3.8%. FS Bancorp pays out 27.0% of its earnings in the form of a dividend. CVB Financial pays out 52.6% 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. FS Bancorp has increased its dividend for 12 consecutive years.

Earnings & Valuation

This table compares FS Bancorp and CVB Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS Bancorp	$219.52 million	1.03	$33.35 million	$4.29	9.72
CVB Financial	$648.47 million	5.66	$209.30 million	$1.52	13.69

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

Summary

CVB Financial beats FS Bancorp on 11 of the 16 factors compared between the two stocks.

About FS Bancorp

FS Bancorp, Inc. operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches. The company operates in two segments, Commercial and Consumer Banking; and Home Lending. It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans. It operates full bank service branches and home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, and Thurston counties; and a loan production office in the market area of the Tri-Cities. FS Bancorp, Inc. was founded in 1936 and is headquartered in Mountlake Terrace, Washington.

About CVB Financial

CVB Financial Corp. operates as a bank holding company for Citizens Business Bank, a state-chartered bank that provides banking and financial services to small to mid-sized businesses and individuals. It offers checking, savings, money market, and time certificates of deposit products for business and personal accounts; and serves as a federal tax depository for business customers. The company also provides commercial lending products comprising lines of credit and other working capital financing, accounts receivable lending, and letters of credit; agriculture loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers, and farmers; lease financing services for municipal governments; commercial real estate and construction loans; and consumer financing products, including automobile leasing and financing, lines of credit, credit cards, home mortgages, and home equity loans and lines of credit. In addition, it offers various specialized services, such as treasury management systems for monitoring cash flow, merchant card processing program, armored pick-up and delivery, payroll services, remote deposit capture, electronic funds transfers, wires and automated clearinghouse, and online account access. Further, the company provides trust services, such as fiduciary services, mutual funds, annuities, 401(k) plans, and individual investment accounts. CVB Financial Corp. was founded in 1974 and is headquartered in Ontario, California.