Reviewing Malaga Financial (OTCMKTS:MLGF) and First Northwest Bancorp (NASDAQ:FNWB)

Malaga Financial (OTCMKTS:MLGF) and First Northwest Bancorp (NASDAQ:FNWB) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Dividends

Malaga Financial pays an annual dividend of $1.00 per share and has a dividend yield of 4.7%. First Northwest Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 2.8%. Malaga Financial pays out 44.6% of its earnings in the form of a dividend. First Northwest Bancorp pays out 50.9% 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. Malaga Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Malaga Financial	N/A	N/A	N/A
First Northwest Bancorp	4.20%	3.15%	0.23%

Volatility and Risk

Malaga Financial has a beta of 0.08, suggesting that its stock price is 92% less volatile than the S&P 500. Comparatively, First Northwest Bancorp has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Malaga Financial and First Northwest Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Malaga Financial	0	0	0	0	0.00
First Northwest Bancorp	1	2	1	0	2.00

First Northwest Bancorp has a consensus target price of $13.50, indicating a potential upside of 34.87%. Given First Northwest Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe First Northwest Bancorp is more favorable than Malaga Financial.

Insider & Institutional Ownership

1.2% of Malaga Financial shares are owned by institutional investors. Comparatively, 66.1% of First Northwest Bancorp shares are owned by institutional investors. 4.1% of First Northwest Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Malaga Financial	N/A	N/A	$21.55 million	$2.24	9.59
First Northwest Bancorp	$67.76 million	1.40	-$4.19 million	$0.55	18.20

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

Summary

First Northwest Bancorp beats Malaga Financial on 11 of the 15 factors compared between the two stocks.

About Malaga Financial

Malaga Financial Corporation operates as the holding company for Malaga Bank that provides various community banking products and services to personal and business customers. It offers checking, savings, NOW, and money market accounts, certificates of deposits, business banking, consumer, and demand deposits. The company also provides commercial real estate, single and multi-family residential mortgage, consumer, 14-unit investment property, construction, personal, and business loans; home equity lines of credit; and certificates of deposit. In addition, it offers coupon redemption, direct deposit, overdraft lines of credit, telephone transfers, U.S. savings bond redemption, and wire transfer services; and ATM and VISA debit cards, bank by mail, medallion signature guarantee, night depository, notary, safe deposit boxes, and trust deed note collection services. Further, the company provides online banking services, including bill payer, e-statements, and mobile banking services. The company was incorporated in 2002 and is headquartered in Palos Verdes Estates, California.

About First Northwest Bancorp

First Northwest Bancorp operates as a bank holding company for First Fed Bank that provides commercial and consumer banking services to individuals, businesses, and nonprofit organizations in western Washington, the United States. The company accepts various deposit instruments, including checking, money market deposit, savings, and transaction accounts, as well as certificates of deposit. It also originates one- to four-family mortgage loans, commercial and multi-family real estate loans, construction and land loans, and commercial business loans, as well as consumer loans primarily consisting of automobile loans, and home-equity loans and lines of credit. First Northwest Bancorp operates branch offices in Clallam, Jefferson, King, Kitsap, and Whatcom Counties, Washington. First Northwest Bancorp was founded in 1923 and is based in Port Angeles, Washington.