Head to Head Comparison: First Capital (NASDAQ:FCAP) versus Waterstone Financial (NASDAQ:WSBF)

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

Analyst Ratings

This is a summary of recent ratings for Waterstone Financial and First Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	0	0	N/A
First Capital	0	0	0	0	N/A

Institutional and Insider Ownership

62.7% of Waterstone Financial shares are owned by institutional investors. Comparatively, 11.6% of First Capital shares are owned by institutional investors. 8.3% of Waterstone Financial shares are owned by insiders. Comparatively, 4.4% of First Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Waterstone Financial and First Capital’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterstone Financial	$180.39 million	1.63	$9.38 million	$0.52	29.14
First Capital	$42.04 million	2.49	$12.79 million	$3.57	8.75

First Capital has lower revenue, but higher earnings than Waterstone Financial. First Capital is trading at a lower price-to-earnings ratio than Waterstone Financial, indicating that it is currently the more affordable of the two stocks.

Dividends

Waterstone Financial pays an annual dividend of $0.60 per share and has a dividend yield of 4.0%. First Capital pays an annual dividend of $1.16 per share and has a dividend yield of 3.7%. Waterstone Financial pays out 115.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First Capital pays out 32.5% of its earnings in the form of a dividend.

Volatility and Risk

Waterstone Financial has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, First Capital has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	6.14%	3.73%	0.57%
First Capital	22.04%	11.78%	1.04%

Summary

First Capital beats Waterstone Financial on 7 of the 13 factors compared between the two stocks.

About Waterstone Financial

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. It also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. The company was founded in 1921 and is based in Wauwatosa, Wisconsin.

About First Capital

First Capital, Inc. operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers. The company offers various deposit instruments, including non-interest-bearing checking accounts, negotiable order of withdrawal accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plans. It also provides residential mortgage loans, construction loans for residential and commercial properties, and commercial real estate loans, as well as commercial business loans. In addition, the company originates mortgage loans for sale in the secondary market and sells non-deposit investment products; and offers various secured or guaranteed consumer loans comprising automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans, credit cards and other personal loans, and loans secured by savings deposits, as well as unsecured consumer loans. First Capital, Inc. was founded in 1891 and is based in Corydon, Indiana.