Financial Analysis: Grupo Financiero Galicia (NASDAQ:GGAL) versus Heritage Financial (NASDAQ:HFWA)

Grupo Financiero Galicia (NASDAQ:GGAL) and Heritage Financial (NASDAQ:HFWA) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, institutional ownership, profitability, analyst recommendations and dividends.

Insider and Institutional Ownership

78.3% of Heritage Financial shares are owned by institutional investors. 1.5% of Heritage Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Grupo Financiero Galicia and Heritage Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Grupo Financiero Galicia	N/A	N/A	N/A
Heritage Financial	20.44%	8.78%	1.15%

Risk and Volatility

Grupo Financiero Galicia has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Grupo Financiero Galicia and Heritage Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Grupo Financiero Galicia	1	4	2	0	2.14
Heritage Financial	1	2	4	0	2.43

Grupo Financiero Galicia presently has a consensus target price of $72.50, indicating a potential upside of 101.00%. Heritage Financial has a consensus target price of $32.67, indicating a potential upside of 17.13%. Given Grupo Financiero Galicia’s higher possible upside, equities research analysts clearly believe Grupo Financiero Galicia is more favorable than Heritage Financial.

Dividends

Grupo Financiero Galicia pays an annual dividend of $0.57 per share and has a dividend yield of 1.6%. Heritage Financial pays an annual dividend of $1.00 per share and has a dividend yield of 3.6%. Grupo Financiero Galicia pays out 23.3% of its earnings in the form of a dividend. Heritage Financial pays out 47.6% 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. Heritage Financial has increased its dividend for 14 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Grupo Financiero Galicia and Heritage Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Grupo Financiero Galicia	$10.56 billion	0.55	$170.02 million	$2.45	14.72
Heritage Financial	$335.97 million	3.40	$67.53 million	$2.10	13.28

Grupo Financiero Galicia has higher revenue and earnings than Heritage Financial. Heritage Financial is trading at a lower price-to-earnings ratio than Grupo Financiero Galicia, indicating that it is currently the more affordable of the two stocks.

Summary

Heritage Financial beats Grupo Financiero Galicia on 10 of the 17 factors compared between the two stocks.

About Grupo Financiero Galicia

Grupo Financiero Galicia S.A., a financial service holding company, provides various financial products and services to individuals and companies in Argentina. The company operates through Banks, NaranjaX, Insurance, and Other Businesses segments. It also offers personal loans; express and mortgage loans; pledge and credit card loans; credit and debit cards; and online banking services, as well as savings, deposits, and checking accounts related services. In addition, the company offers financing products; consumer finance and digital banking services; electronic check; global custody services; Fima funds; financial and stock market services to individuals, companies, and financial institutions; foreign trade services; and capital market and investment banking products that include debt securities, short-term securities, and financial trusts. Further, it provides robbery, personal accident, life collective, home, life, integral, pet, surety, and technical insurance products. Additionally, the company offers private banking services to high net worth individuals; and operates digital investment platform. Grupo Financiero Galicia S.A. was founded in 1905 and is based in Buenos Aires, Argentina.

About Heritage Financial

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. It accepts various deposit products, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. The company’s loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. It also originates loans that are guaranteed by the U.S. Small Business Administration; and provides objective advice from trusted advisers. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1927 and is headquartered in Olympia, Washington.