Heritage Financial (NASDAQ:HFWA) & Byline Bancorp (NYSE:BY) Critical Comparison

Byline Bancorp (NYSE:BY) and Heritage Financial (NASDAQ:HFWA) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, dividends, profitability, valuation, analyst recommendations and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Byline Bancorp	23.36%	11.84%	1.53%
Heritage Financial	20.44%	8.78%	1.15%

Earnings & Valuation

This table compares Byline 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
Byline Bancorp	$633.15 million	2.68	$130.05 million	$3.31	11.33
Heritage Financial	$294.09 million	3.97	$67.53 million	$2.10	13.60

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

Risk and Volatility

Byline Bancorp has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Byline Bancorp and Heritage Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Byline Bancorp	0	3	3	0	2.50
Heritage Financial	1	2	4	0	2.43

Byline Bancorp presently has a consensus price target of $43.00, indicating a potential upside of 14.69%. Heritage Financial has a consensus price target of $32.67, indicating a potential upside of 14.34%. Given Byline Bancorp’s stronger consensus rating and higher possible upside, equities analysts plainly believe Byline Bancorp is more favorable than Heritage Financial.

Dividends

Byline Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.5%. Heritage Financial pays an annual dividend of $1.00 per share and has a dividend yield of 3.5%. Byline Bancorp pays out 16.9% of its earnings in the form of a dividend. Heritage Financial pays out 47.6% 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. Byline Bancorp has raised its dividend for 1 consecutive years and Heritage Financial has raised its dividend for 14 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

67.7% of Byline Bancorp shares are owned by institutional investors. Comparatively, 78.3% of Heritage Financial shares are owned by institutional investors. 29.1% of Byline Bancorp shares are owned by insiders. Comparatively, 1.5% of Heritage Financial shares are owned by 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.

Summary

Byline Bancorp beats Heritage Financial on 11 of the 17 factors compared between the two stocks.

About Byline Bancorp

Byline Bancorp, Inc. operates as the bank holding company for Byline Bank that provides various banking products and services for small and medium sized businesses, commercial real estate and financial sponsors, and consumers in the United States. It offers various retail deposit products, including non-interest-bearing accounts, money market demand accounts, savings accounts, interest-bearing checking accounts, and time deposits; ATM and debit cards; and online, mobile, and text banking services, as well as commercial deposits. The company also provides term loans, revolving lines of credit, and construction financing services; senior secured financing solutions to private equity backed lower middle market companies; small business administration and united states department of agriculture loans; and treasury management products and services. In addition, it offers financing solutions for equipment vendors and their end users; syndication services; and investment, trust, and wealth management services that include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services for foundations and endowments, and high net worth individuals. The company was formerly known as Metropolitan Bank Group, Inc. and changed its name to Byline Bancorp, Inc. in 2015. Byline Bancorp, Inc. was founded in 1914 and is headquartered in Chicago, Illinois.

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.