Waterstone Financial (NASDAQ:WSBF) and Southern Missouri Bancorp (NASDAQ:SMBC) Financial Review

Waterstone Financial (NASDAQ:WSBF) and Southern Missouri Bancorp (NASDAQ:SMBC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Insider & Institutional Ownership

62.7% of Waterstone Financial shares are held by institutional investors. Comparatively, 49.5% of Southern Missouri Bancorp shares are held by institutional investors. 6.0% of Waterstone Financial shares are held by insiders. Comparatively, 15.8% of Southern Missouri Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Waterstone Financial and Southern Missouri Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	14.28%	8.48%	1.30%
Southern Missouri Bancorp	21.36%	12.05%	1.33%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Waterstone Financial and Southern Missouri Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	1	0	3.00
Southern Missouri Bancorp	0	2	2	0	2.50

Southern Missouri Bancorp has a consensus price target of $70.67, suggesting a potential downside of 2.19%. Given Southern Missouri Bancorp’s higher possible upside, analysts plainly believe Southern Missouri Bancorp is more favorable than Waterstone Financial.

Valuation and Earnings

This table compares Waterstone Financial and Southern Missouri Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterstone Financial	$201.29 million	1.75	$26.40 million	$1.66	11.78
Southern Missouri Bancorp	$305.35 million	2.61	$58.58 million	$5.99	12.06

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

Dividends

Waterstone Financial pays an annual dividend of $0.68 per share and has a dividend yield of 3.5%. Southern Missouri Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 1.4%. Waterstone Financial pays out 41.0% of its earnings in the form of a dividend. Southern Missouri Bancorp pays out 16.7% 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. Southern Missouri Bancorp has raised its dividend for 13 consecutive years.

Volatility & Risk

Waterstone Financial has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Southern Missouri Bancorp has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Summary

Southern Missouri Bancorp beats Waterstone Financial on 14 of the 17 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 Southern Missouri Bancorp

Southern Missouri Bancorp, Inc. operates as the bank holding company for Southern Bank that provides banking and financial services to individuals and corporate customers in the United States. The company offers deposits products, including interest-bearing and noninterest-bearing transaction accounts, saving accounts, certificates of deposit, retirement savings plans, and money market deposit accounts. It also provides loans, such as residential mortgage, commercial real estate, construction, and commercial business loans; and consumer loans comprising home equity, direct and indirect automobile loans, second mortgages, mobile home loans, and loans secured by deposits. In addition, the company offers fiduciary and investment management services; commercial and consumer insurance; online and mobile banking services; and debit or credit cards. The company was founded in 1887 and is headquartered in Poplar Bluff, Missouri.