Comparing Harleysville Financial (OTCMKTS:HARL) and Financial Institutions (NASDAQ:FISI)

Harleysville Financial (OTCMKTS:HARL) and Financial Institutions (NASDAQ:FISI) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, analyst recommendations, profitability and institutional ownership.

Analyst Ratings

This is a summary of current ratings and price targets for Harleysville Financial and Financial Institutions, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harleysville Financial	0	0	0	0	N/A
Financial Institutions	0	2	0	0	2.00

Financial Institutions has a consensus target price of $22.00, indicating a potential downside of 5.25%. Given Financial Institutions’ higher probable upside, analysts plainly believe Financial Institutions is more favorable than Harleysville Financial.

Dividends

Harleysville Financial pays an annual dividend of $1.24 per share and has a dividend yield of 5.9%. Financial Institutions pays an annual dividend of $1.20 per share and has a dividend yield of 5.2%. Harleysville Financial pays out 43.5% of its earnings in the form of a dividend. Financial Institutions pays out 47.8% 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. Financial Institutions has increased its dividend for 13 consecutive years. Harleysville Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

1.2% of Harleysville Financial shares are held by institutional investors. Comparatively, 60.5% of Financial Institutions shares are held by institutional investors. 14.5% of Harleysville Financial shares are held by insiders. Comparatively, 2.7% of Financial Institutions shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Harleysville Financial and Financial Institutions’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harleysville Financial	$36.54 million	2.09	$12.22 million	$2.85	7.39
Financial Institutions	$221.40 million	1.62	$50.26 million	$2.51	9.25

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

Volatility and Risk

Harleysville Financial has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, Financial Institutions has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Profitability

This table compares Harleysville Financial and Financial Institutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harleysville Financial	25.16%	11.51%	1.16%
Financial Institutions	13.95%	12.29%	0.83%

Summary

Financial Institutions beats Harleysville Financial on 8 of the 15 factors compared between the two stocks.

About Harleysville Financial

Harleysville Financial Corporation operates as the bank holding company for Harleysville Bank that provides various banking products and services in Pennsylvania. The company offers various deposit products, including savings, money market, and checking accounts, as well as certificates of deposits. It also provides consumer loans, including residential mortgages, savings account loans, and home equity line of credit, construction, and non-real estate consumer loans; and commercial loans, such as commercial mortgages, line of credit, and commercial business loans. In addition, the company offers online banking and bill payment, mobile and telephone banking, remote deposit, debit cards, automated clearing house processing, sweep accounts, zero balance accounts, employee services, and other cash management services. Further, it provides investment services, such as financial consultation, cash and wealth management, education planning, investment strategy, insurance, retirement and estate planning, financial and goal planning, and asset allocation services, as well as offers investment products, such as fixed and variable annuities, mutual funds, life insurances, stocks and bonds, tax-advantaged investments, long-term care insurances, disability insurances, retirement plans/individual retirement accounts, wrap accounts, and unit investment trusts. Its primary market area includes Montgomery County and Bucks County. The company was formerly known as Harleysville Savings Financial Corporation and changed its name to Harleysville Financial Corporation in May 2017. Harleysville Financial Corporation was founded in 1915 and is headquartered in Harleysville, Pennsylvania.

About Financial Institutions

Financial Institutions, Inc. operates as a holding company for the Five Star Bank, a chartered bank that provides banking and financial services to individuals, municipalities, and businesses in New York. The company provides checking and savings account programs, including money market accounts, certificates of deposit, sweep investments, and individual retirement and other qualified plan accounts, as well as NOW accounts. Its loan products include term loans and lines of credit; short and medium-term commercial loans for working capital, business expansion, and purchase of equipment; commercial business loans to the agricultural industry; commercial mortgage loans; one-to-four family residential mortgage loans, home improvement loans, closed-end home equity loans, and home equity lines of credit; and consumer loans, such as automobile, secured installment, and personal loans. The company offers personal insurance products, including automobile, homeowners, boat, recreational vehicle, landlord, and umbrella coverage; commercial insurance comprising property, liability, automobile, inland marine, workers compensation, bonds, crop, and umbrella insurance products; and financial services, such as life and disability insurance, medicare supplements, long-term care, annuities, mutual funds, and retirement programs. In addition, it offers customized investment advisory, wealth management, investment consulting, and retirement plan services, as well as operates a real estate investment trust that holds residential mortgages and commercial real estate loans. Financial Institutions, Inc. was founded in 1817 and is headquartered in Warsaw, New York.