Reviewing Northfield Bancorp (NASDAQ:NFBK) & Heritage Financial (NASDAQ:HFWA)

Heritage Financial (NASDAQ:HFWA) and Northfield Bancorp (NASDAQ:NFBK) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Profitability

This table compares Heritage Financial and Northfield Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Financial	20.50%	8.71%	1.13%
Northfield Bancorp	1.77%	6.75%	0.83%

Valuation & Earnings

This table compares Heritage Financial and Northfield Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Financial	$266.46 million	4.59	$67.53 million	$2.04	14.56
Northfield Bancorp	$266.05 million	2.32	$800,000.00	$0.12	123.25

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

Volatility & Risk

Heritage Financial has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500. Comparatively, Northfield Bancorp has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Dividends

Heritage Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.2%. Northfield Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 3.5%. Heritage Financial pays out 47.1% of its earnings in the form of a dividend. Northfield Bancorp pays out 433.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Heritage Financial has increased its dividend for 14 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations for Heritage Financial and Northfield Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Financial	0	3	3	0	2.50
Northfield Bancorp	0	2	0	0	2.00

Heritage Financial currently has a consensus target price of $30.50, indicating a potential upside of 2.69%. Northfield Bancorp has a consensus target price of $14.50, indicating a potential downside of 1.96%. Given Heritage Financial’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Heritage Financial is more favorable than Northfield Bancorp.

Insider and Institutional Ownership

78.3% of Heritage Financial shares are held by institutional investors. Comparatively, 65.5% of Northfield Bancorp shares are held by institutional investors. 1.5% of Heritage Financial shares are held by insiders. Comparatively, 6.0% of Northfield Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Heritage Financial beats Northfield Bancorp on 13 of the 17 factors compared between the two stocks.

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.

About Northfield Bancorp

Northfield Bancorp, Inc. (Staten Island, NY) operates as the bank holding company for Northfield Bank that provides various banking products and services primarily to individuals and corporate customers. It accepts various deposits products, including certificates of deposit, passbook, statement, and money market savings accounts; transaction deposit accounts comprising negotiable orders of withdrawal accounts, and interest and non-interest-bearing checking accounts; and brokered deposits. The company also offers various loans comprising multifamily and other commercial real estate loans, construction and land loans, commercial and industrial loans, one-to-four family residential real estate loans, and home equity loans and lines of credit. In addition, it purchases various investment securities, such as mortgage-backed securities and corporate bonds; and deposits funds in other financial institutions, as well as holds mortgage loans, mortgage-backed securities, and other investments. Further, the company provides automated teller machines; telephone, internet, and mobile banking services; and ACH and wire transfers, cash management, positive pay, and remote deposit capture services. It operates full-service banking offices in Staten Island and Brooklyn, New York; and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. Northfield Bancorp, Inc. (Staten Island, NY) was founded in 1887 and is headquartered in Woodbridge, New Jersey.