Contrasting FS Bancorp (NASDAQ:FSBW) and Oak Valley Bancorp (NASDAQ:OVLY)

FS Bancorp (NASDAQ:FSBW) and Oak Valley Bancorp (NASDAQ:OVLY) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Risk & Volatility

FS Bancorp has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Oak Valley Bancorp has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Dividends

FS Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 2.7%. Oak Valley Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 2.1%. FS Bancorp pays out 26.6% of its earnings in the form of a dividend. Oak Valley Bancorp pays out 20.5% 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. FS Bancorp has raised its dividend for 12 consecutive years and Oak Valley Bancorp has raised its dividend for 11 consecutive years. FS Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares FS Bancorp and Oak Valley Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS Bancorp	$151.83 million	2.07	$35.02 million	$4.21	9.85
Oak Valley Bancorp	$89.45 million	2.72	$24.95 million	$2.93	9.92

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

Analyst Recommendations

This is a summary of recent ratings for FS Bancorp and Oak Valley Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS Bancorp	0	1	0	0	2.00
Oak Valley Bancorp	0	0	0	0	0.00

FS Bancorp presently has a consensus price target of $44.00, indicating a potential upside of 6.15%. Given FS Bancorp’s stronger consensus rating and higher probable upside, research analysts clearly believe FS Bancorp is more favorable than Oak Valley Bancorp.

Profitability

This table compares FS Bancorp and Oak Valley Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS Bancorp	15.88%	11.32%	1.09%
Oak Valley Bancorp	26.38%	13.12%	1.27%

Institutional and Insider Ownership

63.9% of FS Bancorp shares are owned by institutional investors. Comparatively, 30.9% of Oak Valley Bancorp shares are owned by institutional investors. 12.7% of FS Bancorp shares are owned by insiders. Comparatively, 18.1% of Oak Valley Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

FS Bancorp beats Oak Valley Bancorp on 9 of the 16 factors compared between the two stocks.

About FS Bancorp

FS Bancorp, Inc. operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches. The company operates in two segments, Commercial and Consumer Banking; and Home Lending. It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans. It operates full bank service branches and home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, and Thurston counties; and a loan production office in the market area of the Tri-Cities. FS Bancorp, Inc. was founded in 1936 and is headquartered in Mountlake Terrace, Washington.

About Oak Valley Bancorp

Oak Valley Bancorp operates as the bank holding company for Oak Valley Community Bank that provides a range of commercial banking services to individuals and small to medium-sized businesses in the Central Valley and the Eastern Sierras. The company's deposits products include checking and savings, money market, health savings, and individual retirement accounts, as well as certificates of deposit. It also offers commercial real estate loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including automobile loans, home mortgages, credit lines, and other personal loans. In addition, the company provides online and mobile banking, remote deposit capture, merchant, night depository, extended hours, wire transfer of funds, note collection services, and automated teller machines. The company was incorporated in 1990 and is headquartered in Oakdale, California.