Financial Contrast: Kearny Financial (NASDAQ:KRNY) and National Bankshares (NASDAQ:NKSH)

National Bankshares (NASDAQ:NKSH) and Kearny Financial (NASDAQ:KRNY) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Profitability

This table compares National Bankshares and Kearny Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bankshares	23.22%	10.66%	1.09%
Kearny Financial	10.45%	4.90%	0.49%

Institutional and Insider Ownership

29.7% of National Bankshares shares are held by institutional investors. Comparatively, 71.0% of Kearny Financial shares are held by institutional investors. 3.3% of National Bankshares shares are held by company insiders. Comparatively, 7.7% of Kearny Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for National Bankshares and Kearny Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bankshares	0	1	1	0	2.50
Kearny Financial	0	1	3	0	2.75

Kearny Financial has a consensus target price of $10.75, suggesting a potential upside of 16.85%. Given Kearny Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Kearny Financial is more favorable than National Bankshares.

Earnings and Valuation

This table compares National Bankshares and Kearny Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bankshares	$85.32 million	3.21	$15.83 million	$3.18	13.52
Kearny Financial	$347.14 million	1.72	$36.26 million	$0.57	16.14

Kearny Financial has higher revenue and earnings than National Bankshares. National Bankshares 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 & Volatility

National Bankshares has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Kearny Financial has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Dividends

National Bankshares pays an annual dividend of $1.50 per share and has a dividend yield of 3.5%. Kearny Financial pays an annual dividend of $0.44 per share and has a dividend yield of 4.8%. National Bankshares pays out 47.2% of its earnings in the form of a dividend. 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.

Summary

Kearny Financial beats National Bankshares on 10 of the 16 factors compared between the two stocks.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.

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.