Analyzing Timberland Bancorp (NASDAQ:TSBK) and Burke & Herbert Financial Services (NASDAQ:BHRB)

Timberland Bancorp (NASDAQ:TSBK) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Earnings and Valuation

This table compares Timberland Bancorp and Burke & Herbert Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timberland Bancorp	$114.63 million	3.17	$29.16 million	$3.99	11.72
Burke & Herbert Financial Services	$491.11 million	2.95	$117.31 million	$6.24	11.51

Burke & Herbert Financial Services has higher revenue and earnings than Timberland Bancorp. Burke & Herbert Financial Services is trading at a lower price-to-earnings ratio than Timberland Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Timberland Bancorp and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Timberland Bancorp	26.46%	11.72%	1.55%
Burke & Herbert Financial Services	18.86%	13.66%	1.46%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Timberland Bancorp and Burke & Herbert Financial Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timberland Bancorp	0	0	1	0	3.00
Burke & Herbert Financial Services	0	3	2	1	2.67

Burke & Herbert Financial Services has a consensus target price of $75.25, suggesting a potential upside of 4.78%. Given Burke & Herbert Financial Services’ higher possible upside, analysts plainly believe Burke & Herbert Financial Services is more favorable than Timberland Bancorp.

Volatility & Risk

Timberland Bancorp has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500. Comparatively, Burke & Herbert Financial Services has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Insider & Institutional Ownership

65.5% of Timberland Bancorp shares are owned by institutional investors. 3.6% of Timberland Bancorp shares are owned by insiders. Comparatively, 12.0% of Burke & Herbert Financial Services shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Timberland Bancorp pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. Burke & Herbert Financial Services pays an annual dividend of $2.20 per share and has a dividend yield of 3.1%. Timberland Bancorp pays out 30.1% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 35.3% 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. Timberland Bancorp has increased its dividend for 13 consecutive years and Burke & Herbert Financial Services has increased its dividend for 1 consecutive years.

Summary

Burke & Herbert Financial Services beats Timberland Bancorp on 10 of the 18 factors compared between the two stocks.

About Timberland Bancorp

Timberland Bancorp, Inc. operates as the bank holding company for Timberland Bank that provides various community banking services in Washington. It offers various deposit products, including money market deposit, checking, and regular savings accounts, as well as certificates of deposit. The company also provides one-to four-family residential, multi-family, and commercial real estate loans; and construction lending products, such as custom and owner/builder, speculative one- to four-family, commercial, multi-family, land development, and land development. In addition, it offers consumer loans comprising home equity lines of credit and second mortgage loans, automobile loans, boat loans, motorcycle loans, recreational vehicle loans, savings account loans, and unsecured loans; and commercial business loans. Timberland Bancorp, Inc. was founded in 1915 and is headquartered in Hoquiam, Washington.

About Burke & Herbert Financial Services

Burke Herbert Financial Services Corp. is a bank holding company, which engages in the provision of banking products and financial services to small to medium-sized businesses, their owners and employees, professional corporations, non-profits, and individuals. It operates through the following loan portfolio segments: Commercial Real Estate, Owner-Occupied Commercial Real Estate, Acquisition, Construction, and Development, Commercial and Industrial, Single Family Residential (1-4 Units), and Consumer Non-Real Estate and Other. The Commercial Real Estate segment includes leasing of the real estate collateral or income generated from the sale of the collateral. The Owner-Occupied Commercial Real Estate segment focuses on the operations of the business that occupies the property and the value of the collateral. The Acquisition, Construction, and Development segment offers creditworthiness of the borrower, project completion within budget, sale after completion, and the value of the collateral. The Commercial and Industrial segment is involved in the operations of the business and the value of the collateral. The Single Family Residential (1-4 Units) segment provides loans for investment purpose carry risk associated with the continued creditworthiness of the borrower, the value of the collateral, and either the net operating income generated from the lease of the real estate collateral or income generated from the sale of the collateral. The Consumer Non-Real Estate and Other segment covers loans carry risk associated with the creditworthiness of the borrower and the value of the collateral. The company was founded on September 14, 2022 and is headquartered in Alexandria, VA.