Head to Head Survey: Sterling Bancorp (NASDAQ:SBT) versus Sound Financial Bancorp (NASDAQ:SFBC)

Sterling Bancorp (NASDAQ:SBT) and Sound Financial Bancorp (NASDAQ:SFBC) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Valuation & Earnings

This table compares Sterling Bancorp and Sound Financial Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sterling Bancorp $183.81 million 2.13 $63.47 million $1.20 6.50
Sound Financial Bancorp $37.45 million 2.57 $7.04 million N/A N/A

Sterling Bancorp has higher revenue and earnings than Sound Financial Bancorp.

Volatility & Risk

Sterling Bancorp has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500.

Institutional & Insider Ownership

27.9% of Sterling Bancorp shares are held by institutional investors. Comparatively, 39.9% of Sound Financial Bancorp shares are held by institutional investors. 3.0% of Sterling Bancorp shares are held by insiders. Comparatively, 12.7% of Sound Financial Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sterling Bancorp and Sound Financial Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sterling Bancorp 0 1 1 0 2.50
Sound Financial Bancorp 0 0 0 0 N/A

Sterling Bancorp presently has a consensus target price of $12.25, suggesting a potential upside of 57.05%. Given Sterling Bancorp’s higher probable upside, equities analysts clearly believe Sterling Bancorp is more favorable than Sound Financial Bancorp.

Dividends

Sterling Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. Sound Financial Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.5%. Sterling Bancorp pays out 3.3% of its earnings in the form of a dividend. Sound Financial Bancorp has raised its dividend for 5 consecutive years. Sound Financial Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Sterling Bancorp 31.01% 17.26% 1.81%
Sound Financial Bancorp 16.79% 8.37% 0.88%

Summary

Sterling Bancorp beats Sound Financial Bancorp on 8 of the 15 factors compared between the two stocks.

Sterling Bancorp Company Profile

Sterling Bancorp, Inc. is a unitary thrift holding company. Its wholly owned subsidiary, Sterling Bank and Trust, F.S.B., has primary branch operations in San Francisco and Los Angeles, California and New York City, and a loan production office in Seattle, Washington. Sterling offers a broad range of loan products to the residential and commercial markets, as well as retail and business banking services. Sterling also has an operations center and a branch in Southfield, Michigan. Sterling was named as the top performing community bank in the United States with total assets between $1 billion and $10 billion in 2017 by SNL/S&P Global Market Intelligence.

Sound Financial Bancorp Company Profile

Sound Financial Bancorp, Inc. operates as the holding company for Sound Community Bank that provides traditional banking and other financial services for individuals and businesses. It accepts various deposits products comprising savings accounts, money market deposit accounts, NOW accounts, demand accounts, certificates of deposit, and checking accounts. The company also offers various loan products, such as loans secured by first and second mortgages on one-to four-family residences; home equity loans comprising 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; secured and unsecured consumer loans, including new and used manufactured home loans, floating home loans, automobile loans, boat loans, and recreational vehicle loans, and loans secured by deposit accounts; land loans; and commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory. It operates through main office in Seattle; seven branch offices, of which four are located in the Seattle Metropolitan Statistical area, two are located in Clallam County, and one is located in Jefferson County; and two loan production offices, including one located in the Madison Park neighborhood of Seattle and one located in Sequim. Sound Financial Bancorp, Inc. was incorporated in 2008 and is headquartered in Seattle, Washington.

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