Heritage Financial (NASDAQ:HFWA) & TFS Financial (NASDAQ:TFSL) Financial Comparison

Heritage Financial (NASDAQ:HFWA) and TFS Financial (NASDAQ:TFSL) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Financial	15.22%	7.34%	0.90%
TFS Financial	10.67%	4.40%	0.48%

Analyst Recommendations

This is a summary of recent ratings and price targets for Heritage Financial and TFS Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	2	1	0	2.33
TFS Financial	0	1	0	0	2.00

Heritage Financial presently has a consensus price target of $27.67, indicating a potential upside of 13.20%. TFS Financial has a consensus price target of $15.00, indicating a potential upside of 6.69%. Given Heritage Financial’s stronger consensus rating and higher possible upside, equities analysts plainly believe Heritage Financial is more favorable than TFS Financial.

Dividends

Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.9%. TFS Financial pays an annual dividend of $1.13 per share and has a dividend yield of 8.0%. Heritage Financial pays out 67.1% of its earnings in the form of a dividend. TFS Financial pays out 389.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Heritage Financial has increased its dividend for 14 consecutive years.

Volatility and Risk

Heritage Financial has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, TFS Financial has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Valuation and Earnings

This table compares Heritage Financial and TFS Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$225.94 million	3.67	$43.26 million	$1.43	17.09
TFS Financial	$758.78 million	5.20	$79.59 million	$0.29	48.48

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

Institutional & Insider Ownership

78.3% of Heritage Financial shares are held by institutional investors. Comparatively, 9.8% of TFS Financial shares are held by institutional investors. 1.8% of Heritage Financial shares are held by insiders. Comparatively, 1.0% of TFS Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

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

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.

About TFS Financial

TFS Financial Corporation, through its subsidiaries, provides retail consumer banking services in the United States. Its deposit products include savings, money market, checking, individual retirement, and other qualified plan accounts, as well as certificates of deposit. The company also provides residential real estate mortgage loans, residential construction loans, and home equity loans and lines of credit, as well as purchase mortgages and first mortgage refinance loans. In addition, it offers escrow and settlement services. The company provides its products and services through its main office in Cleveland, Ohio; and multiple full-service branches and loan production offices located throughout the states of Ohio and Florida. TFS Financial Corporation was founded in 1938 and is headquartered in Cleveland, Ohio. TFS Financial Corporation is a subsidiary of Third Federal Savings and Loan Association of Cleveland, MHC.