Contrasting Byline Bancorp (NYSE:BY) & Heritage Financial (NASDAQ:HFWA)

Heritage Financial (NASDAQ:HFWA – Get Free Report) and Byline Bancorp (NYSE:BY – Get Free Report) 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.

Institutional and Insider Ownership

78.3% of Heritage Financial shares are owned by institutional investors. Comparatively, 67.7% of Byline Bancorp shares are owned by institutional investors. 1.5% of Heritage Financial shares are owned by insiders. Comparatively, 29.1% of Byline 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.

Valuation & Earnings

This table compares Heritage Financial and Byline Bancorp”s gross revenue, earnings per share (EPS) and valuation.

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

Dividends

Heritage Financial pays an annual dividend of $1.00 per share and has a dividend yield of 3.6%. Byline Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.5%. Heritage Financial pays out 47.6% of its earnings in the form of a dividend. Byline Bancorp pays out 16.9% 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. Heritage Financial has raised its dividend for 14 consecutive years and Byline Bancorp has raised its dividend for 1 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Heritage Financial has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, Byline Bancorp has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Heritage Financial and Byline Bancorp, as reported by MarketBeat.com.

Heritage Financial presently has a consensus price target of $32.67, indicating a potential upside of 16.09%. Byline Bancorp has a consensus price target of $43.00, indicating a potential upside of 13.87%. Given Heritage Financial’s higher probable upside, research analysts clearly believe Heritage Financial is more favorable than Byline Bancorp.

Profitability

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

Summary

Byline Bancorp beats Heritage Financial on 10 of the 17 factors compared between the two stocks.

About Heritage Financial

(Get Free Report)

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 Byline Bancorp

(Get Free Report)

Byline Bancorp, Inc. operates as the bank holding company for Byline Bank that provides various banking products and services for small and medium sized businesses, commercial real estate and financial sponsors, and consumers in the United States. It offers various retail deposit products, including non-interest-bearing accounts, money market demand accounts, savings accounts, interest-bearing checking accounts, and time deposits; ATM and debit cards; and online, mobile, and text banking services, as well as commercial deposits. The company also provides term loans, revolving lines of credit, and construction financing services; senior secured financing solutions to private equity backed lower middle market companies; small business administration and united states department of agriculture loans; and treasury management products and services. In addition, it offers financing solutions for equipment vendors and their end users; syndication services; and investment, trust, and wealth management services that include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services for foundations and endowments, and high net worth individuals. The company was formerly known as Metropolitan Bank Group, Inc. and changed its name to Byline Bancorp, Inc. in 2015. Byline Bancorp, Inc. was founded in 1914 and is headquartered in Chicago, Illinois.