Head to Head Comparison: Waterstone Financial (NASDAQ:WSBF) & Suruga Bank (OTCMKTS:SUGBY)

Waterstone Financial (NASDAQ:WSBF) and Suruga Bank (OTCMKTS:SUGBY) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Analyst Recommendations

This is a breakdown of recent recommendations for Waterstone Financial and Suruga Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	1	0	3.00
Suruga Bank	0	0	0	0	0.00

Earnings and Valuation

This table compares Waterstone Financial and Suruga Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterstone Financial	$201.29 million	1.69	$26.40 million	$1.66	11.28
Suruga Bank	$598.19 million	2.28	$133.17 million	$9.76	8.20

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

Profitability

This table compares Waterstone Financial and Suruga Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	14.28%	8.50%	1.30%
Suruga Bank	27.03%	9.01%	0.78%

Risk and Volatility

Waterstone Financial has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, Suruga Bank has a beta of -0.03, indicating that its share price is 103% less volatile than the S&P 500.

Institutional & Insider Ownership

62.7% of Waterstone Financial shares are held by institutional investors. 6.0% of Waterstone Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Waterstone Financial pays an annual dividend of $0.68 per share and has a dividend yield of 3.6%. Suruga Bank pays an annual dividend of $2.09 per share and has a dividend yield of 2.6%. Waterstone Financial pays out 41.0% of its earnings in the form of a dividend. Suruga Bank pays out 21.4% 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.

Summary

Waterstone Financial beats Suruga Bank on 8 of the 15 factors compared between the two stocks.

About Waterstone Financial

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. It also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. The company was founded in 1921 and is based in Wauwatosa, Wisconsin.

About Suruga Bank

Suruga Bank Ltd. provides various banking and financial products and services to individuals and corporate customers in Japan. The company offers deposit products, such as time, ordinary, savings, foreign currency, and other deposits, as well as current and general accounts; card, housing, second house, startup, and business up term loans, as well as loans by purpose; credit and debit cards; overdrafts; and other financing products. It also provides investment trust, public bond, pension contribution, insurance, inheritance/trust, lottery, foreign currency, pay-easy, web direct, safe deposit box, external linkage, foreign remittance, fund management, e-combination, payment, nursing care/medical care/dispensing compensation receivable factoring, mortgage, and Internet and telephone banking services. In addition, the company offers staffing, money lending, guarantee, printing, leasing, and agency services. The company was incorporated in 1895 and is headquartered in Numazu, Japan.