Head to Head Comparison: Berkshire Hills Bancorp (BHLB) vs. FS Bancorp (FSBW)

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Berkshire Hills Bancorp and FS Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Berkshire Hills Bancorp 0 1 3 0 2.75
FS Bancorp 0 1 0 0 2.00

Berkshire Hills Bancorp presently has a consensus target price of $41.13, indicating a potential upside of 5.99%. FS Bancorp has a consensus target price of $52.00, indicating a potential downside of 10.10%. Given Berkshire Hills Bancorp’s stronger consensus rating and higher possible upside, equities analysts clearly believe Berkshire Hills Bancorp is more favorable than FS Bancorp.

Profitability

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

Net Margins Return on Equity Return on Assets
Berkshire Hills Bancorp 12.82% 7.39% 0.95%
FS Bancorp 21.72% 13.57% 1.56%

Insider & Institutional Ownership

69.5% of Berkshire Hills Bancorp shares are held by institutional investors. Comparatively, 49.9% of FS Bancorp shares are held by institutional investors. 1.6% of Berkshire Hills Bancorp shares are held by insiders. Comparatively, 11.6% of FS Bancorp shares are held 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.

Earnings and Valuation

This table compares Berkshire Hills Bancorp and FS Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Berkshire Hills Bancorp $485.95 million 3.63 $55.24 million $2.29 16.94
FS Bancorp $70.25 million 3.05 $14.08 million $4.17 13.87

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

Dividends

Berkshire Hills Bancorp pays an annual dividend of $0.88 per share and has a dividend yield of 2.3%. FS Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Berkshire Hills Bancorp pays out 38.4% of its earnings in the form of a dividend. FS Bancorp pays out 13.4% 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. Berkshire Hills Bancorp has raised its dividend for 3 consecutive years. Berkshire Hills Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Berkshire Hills Bancorp has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, FS Bancorp has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Summary

Berkshire Hills Bancorp beats FS Bancorp on 11 of the 17 factors compared between the two stocks.

About Berkshire Hills Bancorp

Berkshire Hills Bancorp, Inc. operates as a bank holding company, which engages in the provision of community banking services. The firm’s loan portfolio comprises of the following: commercial real estate; commercial and industrial; residential mortgage; and consumer. It also offers savings and checking accounts, deposits, lending, mortgages loans, insurance, and wealth management products. The company was founded in June 2000 and is headquartered in Pittsfield, MA.

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 families, businesses, and industry niches in Puget Sound area communities, Washington. The company offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposits. It also 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 indirect home improvement and automobile-secured loans. As of December 31, 2016, the company operated 1 administrative office, 11 bank offices, and 7 loan production offices. FS Bancorp, Inc. was founded in 1936 and is based in Mountlake Terrace, Washington.

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