Contrasting First Defiance Financial (FDEF) and HMN Financial (HMNF)

First Defiance Financial (NASDAQ:FDEF) and HMN Financial (NASDAQ:HMNF) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, dividends, profitability and institutional ownership.

Profitability

This table compares First Defiance Financial and HMN Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Defiance Financial 28.21% 11.70% 1.48%
HMN Financial 21.62% 10.07% 1.14%

Risk and Volatility

First Defiance Financial has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, HMN Financial has a beta of 0.16, meaning that its stock price is 84% less volatile than the S&P 500.

Insider and Institutional Ownership

64.4% of First Defiance Financial shares are owned by institutional investors. Comparatively, 40.7% of HMN Financial shares are owned by institutional investors. 3.1% of First Defiance Financial shares are owned by insiders. Comparatively, 7.9% of HMN Financial 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.

Dividends

First Defiance Financial pays an annual dividend of $0.76 per share and has a dividend yield of 2.6%. HMN Financial does not pay a dividend. First Defiance Financial pays out 34.1% of its earnings in the form of a dividend. First Defiance Financial has increased its dividend for 6 consecutive years.

Valuation and Earnings

This table compares First Defiance Financial and HMN Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Defiance Financial $163.93 million 3.64 $46.25 million $2.23 13.35
HMN Financial $38.10 million 2.76 $8.24 million N/A N/A

First Defiance Financial has higher revenue and earnings than HMN Financial.

Analyst Recommendations

This is a summary of current recommendations and price targets for First Defiance Financial and HMN Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Defiance Financial 0 1 1 0 2.50
HMN Financial 0 0 0 0 N/A

First Defiance Financial presently has a consensus price target of $34.00, indicating a potential upside of 14.21%. Given First Defiance Financial’s higher probable upside, analysts plainly believe First Defiance Financial is more favorable than HMN Financial.

Summary

First Defiance Financial beats HMN Financial on 13 of the 15 factors compared between the two stocks.

First Defiance Financial Company Profile

First Defiance Financial Corp. operates as a unitary thrift holding company that provides community-based financial services in northwest Ohio, northeast Indiana, and southeastern Michigan. It offers checking accounts, money market accounts, savings accounts, term certificate accounts, and certificates of deposit, as well as Certificate of Deposit Account Registry Service; and consumer finance, 1-4 family residential real estate, commercial real estate, construction, consumer, commercial, and home equity and improvement loans. The company also offers trust and wealth management services, as well as online banking services. In addition, it sells various property and casualty, group health and life, and individual health and life insurance products. The company operates through 43 full service banking centers, as well as 1 loan production office. First Defiance Financial Corp. was incorporated in 1995 and is headquartered in Defiance, Ohio.

HMN Financial Company Profile

HMN Financial, Inc. operates as a bank holding company for Home Federal Savings Bank that provides retail banking products and services. The company offers various deposit accounts, such as savings, negotiable order of withdrawal, non-interest bearing checking, money market, and certificate accounts, including individual retirement accounts. It also provides single family residential loans; commercial real estate and multi-family mortgage loans; construction and commercial business loans; and consumer loans, such as home equity, automobile, recreational vehicle, mobile home, and lot loans, as well as loans secured by deposit accounts, and other loans for household and personal purposes. In addition, the company offers financial planning products and services; and invests in mortgage-backed and related securities, the United States government agency obligations, and other permissible investments. The company operates through 13 full service branches located in Minnesota and Iowa; and 3 loan origination offices located in Minnesota and Wisconsin. HMN Financial, Inc. was founded in 1934 and is based in Rochester, Minnesota.

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