Analyzing Heritage Financial (HFWA) & ESSA Bancorp (ESSA)

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

Risk and Volatility

Heritage Financial has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, ESSA Bancorp has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Heritage Financial and ESSA Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heritage Financial 0 1 3 0 2.75
ESSA Bancorp 0 0 0 0 N/A

Heritage Financial presently has a consensus price target of $34.67, suggesting a potential upside of 2.38%. Given Heritage Financial’s higher probable upside, equities analysts plainly believe Heritage Financial is more favorable than ESSA Bancorp.


Heritage Financial pays an annual dividend of $0.68 per share and has a dividend yield of 2.0%. ESSA Bancorp pays an annual dividend of $0.36 per share and has a dividend yield of 2.2%. Heritage Financial pays out 45.9% of its earnings in the form of a dividend. Heritage Financial has increased its dividend for 7 consecutive years.


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

Net Margins Return on Equity Return on Assets
Heritage Financial 20.10% 8.92% 1.20%
ESSA Bancorp 9.03% 3.64% 0.36%

Institutional and Insider Ownership

79.4% of Heritage Financial shares are owned by institutional investors. Comparatively, 45.2% of ESSA Bancorp shares are owned by institutional investors. 2.7% of Heritage Financial shares are owned by insiders. Comparatively, 8.8% of ESSA Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Heritage Financial and ESSA Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Heritage Financial $183.29 million 6.81 $41.79 million $1.48 22.88
ESSA Bancorp $72.32 million 2.62 $6.53 million N/A N/A

Heritage Financial has higher revenue and earnings than ESSA Bancorp.


Heritage Financial beats ESSA Bancorp on 11 of the 15 factors compared between the two stocks.

About Heritage Financial

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to businesses and individuals in the United States. The company accepts various deposit products, such as noninterest demand accounts, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. Its 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, business lines of credit, term equipment financing, and term real estate loans, as well as commercial loans focuses on real estate related industries and businesses in agricultural, healthcare, legal, and other professions. The company also originates loans that are guaranteed by the U.S. Small Business Administration; and offers trust services through trust powers, as well as objective advice. As of December 31, 2017, the company had a network of 59 branches located in Washington and Oregon. 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 1994 and is headquartered in Olympia, Washington.

About ESSA Bancorp

ESSA Bancorp, Inc. operates as the holding company for ESSA Bank & Trust that provides a range of financial services to individuals, families, and businesses in Pennsylvania. Its deposit products include savings accounts, interest bearing demand accounts, checking accounts, money market accounts, club accounts, certificates of deposit and IRAs, and other qualified plan accounts, as well as commercial checking accounts for businesses. The company's loan portfolio comprises first mortgage loans for the purchase, construction, or refinancing of one- to four-family residential real estate property; commercial real estate loans; home equity loans and lines of credit; and commercial and consumer loans, including indirect auto loans, as well as loans secured by deposits and personal unsecured loans. In addition, it offers insurance benefits consulting services, such as health insurance, life insurance, short term and long term disability, dental, vision, 401(K) retirement planning, and individual health products, as well as asset management and trust, and investment services. As of September 30, 2017, the company operated 25 full-service banking offices, including 10 offices in Monroe County, 3 offices in Lehigh County, 6 offices in Northampton County, 1 office in Lackawanna County, 1 office in Luzerne County, 1 office in Chester County, 2 offices in Delaware County, and 1 office in Montgomery County, Pennsylvania. ESSA Bancorp, Inc. was founded in 1916 and is based in Stroudsburg, Pennsylvania.

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