Head to Head Contrast: Prime Meridian (OTCMKTS:PMHG) versus First Financial Northwest (NASDAQ:FFNW)

First Financial Northwest (NASDAQ:FFNW) and Prime Meridian (OTCMKTS:PMHG) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, dividends, profitability, analyst recommendations, valuation, risk and institutional ownership.

Earnings and Valuation

This table compares First Financial Northwest and Prime Meridian”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Northwest	$37.56 million	5.56	$1.07 million	$0.11	205.77
Prime Meridian	$50.36 million	1.92	$8.49 million	$2.56	11.33

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

Insider & Institutional Ownership

55.0% of First Financial Northwest shares are owned by institutional investors. Comparatively, 11.8% of Prime Meridian shares are owned by institutional investors. 7.2% of First Financial Northwest shares are owned by insiders. Comparatively, 25.9% of Prime Meridian shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

First Financial Northwest has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500. Comparatively, Prime Meridian has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Dividends

First Financial Northwest pays an annual dividend of $0.13 per share and has a dividend yield of 0.6%. Prime Meridian pays an annual dividend of $1.00 per share and has a dividend yield of 3.4%. First Financial Northwest pays out 118.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Prime Meridian pays out 39.1% of its earnings in the form of a dividend. Prime Meridian is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent recommendations and price targets for First Financial Northwest and Prime Meridian, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Northwest	0	2	0	0	2.00
Prime Meridian	0	0	0	0	0.00

First Financial Northwest currently has a consensus price target of $22.75, indicating a potential upside of 0.51%. Given First Financial Northwest’s stronger consensus rating and higher possible upside, analysts clearly believe First Financial Northwest is more favorable than Prime Meridian.

Profitability

This table compares First Financial Northwest and Prime Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Financial Northwest	1.34%	0.67%	0.07%
Prime Meridian	16.86%	10.05%	0.95%

Summary

Prime Meridian beats First Financial Northwest on 10 of the 15 factors compared between the two stocks.

About First Financial Northwest

First Financial Northwest, Inc. operates as the bank holding company for First Financial Northwest Bank that provides commercial banking services in Washington. The company offers a range of deposit products, including noninterest-bearing accounts, interest-bearing demand accounts, money market accounts, savings accounts, and certificates of deposit. Its loan products comprise one-to-four family residential loans; multifamily and commercial real estate loans; construction/land loans; business loans; and consumer loans, such as home equity loans, lines of credit, second mortgage term loans, auto loans, and savings account loans. The company also provides wealth management services; and online banking services, as well as debit cards and ATMs. The company was founded in 1923 and is headquartered in Renton, Washington.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.