Analyzing Lake Shore Bancorp (NASDAQ:LSBK) and Kearny Financial (NASDAQ:KRNY)

Kearny Financial (NASDAQ:KRNY) and Lake Shore Bancorp (NASDAQ:LSBK) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Kearny Financial and Lake Shore Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kearny Financial	0	2	1	0	2.33
Lake Shore Bancorp	0	1	0	0	2.00

Kearny Financial currently has a consensus price target of $10.50, suggesting a potential upside of 11.70%. Given Kearny Financial’s stronger consensus rating and higher probable upside, research analysts plainly believe Kearny Financial is more favorable than Lake Shore Bancorp.

Dividends

Kearny Financial pays an annual dividend of $0.44 per share and has a dividend yield of 4.7%. Lake Shore Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.1%. Kearny Financial pays out 77.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lake Shore Bancorp pays out 31.9% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Kearny Financial and Lake Shore Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kearny Financial	$347.14 million	1.75	$26.08 million	$0.57	16.49
Lake Shore Bancorp	$39.56 million	3.42	$7.27 million	$1.13	15.22

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

Risk and Volatility

Kearny Financial has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Lake Shore Bancorp has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.

Insider & Institutional Ownership

71.0% of Kearny Financial shares are owned by institutional investors. Comparatively, 8.7% of Lake Shore Bancorp shares are owned by institutional investors. 7.4% of Kearny Financial shares are owned by company insiders. Comparatively, 8.4% of Lake Shore Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Kearny Financial and Lake Shore Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kearny Financial	10.45%	4.92%	0.49%
Lake Shore Bancorp	20.74%	5.95%	1.15%

Summary

Kearny Financial beats Lake Shore Bancorp on 9 of the 16 factors compared between the two stocks.

About Kearny Financial

Kearny Financial Corp. operates as the holding company for Kearny Bank that provides various banking products and services in the United States. It offers various deposit products, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, savings accounts, and certificates of deposit accounts. The company also provides various loans, such as multi-family and nonresidential real estate mortgage loans, commercial term loans and lines of credit, one- to four-family residential mortgage loans, and home equity loans and lines of credit; loans to individuals, builders, or developers for the construction of multi-family residential buildings or commercial real estate, or for the construction or renovation of one- to four-family residences; overdraft lines of credit; and personal loans. In addition, it engages in the investment activities. Kearny Financial Corp. was founded in 1884 and is headquartered in Fairfield, New Jersey.

About Lake Shore Bancorp

Lake Shore Bancorp, Inc. operates as a savings and loan holding company for Lake Shore Servings Bank. It offers personal services such as checking, savings, lending, banking, debit card, e-services, and online banking; and business services including deposit products, commercial loans, and business e-statements. The company was founded in 2006 and is headquartered in Dunkirk, NY.